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Government Tax Rebates on Access and Material Handling Equipment

Government Tax Rebates on Access and Material Handling Equipment

Enticing Government depreciation incentives on business assets are currently available, so it might be a good time to invest in access equipment or material handling equipment while incentives last.

Under the Temporary Full Expensing depreciation incentive, you may be able to get a full write-off for eligible assets. Time is running out, so read on to find out how you can make the most of this incentive.

Disclaimer: This information is general in nature and refers directly to information available on the Australian Taxation Office Government website. Please refer to your accountant for financial advice about your specific business needs. 

What are the depreciation incentives?

A collection of unique tax depreciation incentives were introduced in 2020 by the government as measures to assist businesses in the recovery from the impacts of the coronavirus (COVID-19) pandemic. See more on these economic stimulus measures here.

We won’t cover all the depreciation incentives here, as only one incentive (Temporary Full Expensing) applies to new purchases of new or second-hand equipment. 

The other incentives are certainly worth looking into if you’ve already purchased access or material handling equipment and want to claim depreciation on them. Click these ATO links for more information on eligibility and cut-off dates for the:

Those wanting to claim depreciation on equipment they’re yet to buy, will need to read on to find out about Temporary Full Expensing on newly acquired equipment.

What is Temporary Full Expensing?

For those considering buying equipment, Temporary Full Expensing allows a full write-off for eligible assets.

The asset (such as a new knuckle boom lift or second-hand pallet jack) must be: 

  • held at or after 6 October 2020 (Budget Time), and 
  • first used or installed for taxable purposes before 30 June 2022.

Anything used or installed after 30 June 2022 will be exempt (hence why it is called ‘temporary’.

What is a full write-off?

A full-write off deducts the taxable use portion of the cost of an asset. The taxable use portion is that used for your business. So if you were using an asset for both business and personal use, you could only claim a deduction for the business use component.

Note that a full write-off may also be available for improvement costs for eligible assets. See the ATO page on Temporary Full Expensing for more info on what can be claimed.

Eligibility for Temporary Full Expensing

The following eligibility criteria apply:

  • You business must have an aggregated turnover of less than $5 billion
  • If you are a corporate tax entity*, you must meet the alternative income test.
    *See Eligible entities to confirm your eligibility.

Timings:

For the 2020–21 and 2021–22 income years, if eligible, you can claim in your tax return a deduction for the business portion of the cost of:

  • eligible new assets first held, first used or installed ready for use for a taxable purpose* between 7.30pm AEDT on 6 October 2020 and 30 June 2022
  • eligible second-hand assets where both of the following apply
    • The asset was first held, first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2022.
    • Your aggregated turnover is less than $50 million.
  • improvements incurred between 7.30pm AEDT on 6 October 2020 and 30 June 2022 to
    • eligible assets
    • existing assets that would be eligible assets except that they are held before 7.30pm AEDT on 6 October 2020
  • eligible assets of small business entities using the simplified depreciation rules and the balance of their small business pool.

Important notes: 

  • Height access equipment should fall into the category of Eligible assets under Temporary Full Expensing, but will be excluded if you don’t intend for them to ever be located in Australia, or you won't principally use them in Australia for the principal purpose of carrying on a business.
    For more information on asset eligibility, see the ATO page on Eligibility for Temporary Full Expensing.
  • You should always double check your eligibility for Temporary Full Expensing with your accountant or with the ATO. Don’t assume you are eligible and buy costly equipment until you make sure.
  • You can opt out of Temporary Full Expensing for an income year on an asset-by-asset basis if you aren’t using the simplified depreciation rules. You must notify the ATO of this.

To Summarise...

If you are considering a new purchase of EWP access equipment or material handling equipment, now’s a great time to think seriously about it. 

The Temporary Full Expensing incentive is exactly that, temporary. To take advantage of it you need to have both purchased and first used your new equipment before 30 June 2022. This gives you a little over 6 months to place an order, receive the equipment, and get the equipment onto your worksites, so decisions should happen soon. This is general information about the Government incentives, please refer to your accountant for financial advice on what these incentives could mean for you and your business. 

Auslift can help

Though we at Auslift can’t advise you on the tax stuff (please speak with your accountant for that), we can answer all your questions on choosing the right piece of height access equipment or material handling equipment for your needs. We’re also happy to visit your worksite to assess conditions and recommend the most suitable equipment for you. Get in touch today.