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Temporary Full Expensing

Please note this information is general in nature. Any tax benefit that may be available will be subject to your own personal circumstances and evaluation to various eligibility criteria. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice.

Buying a car for your business this year?

If you are considering a purchase of a vehicle for your business this tax year, it's worth noting that the current Temporary Full Expensing incentive will come to an end on 30 June 2023. To take advantage of this opportunity, it's recommended that you act before the end of this financial year to avoid missing out.

Under the current rules, the eligibility thresholds for immediate deductions, for capital assets such as cars, have been raised for businesses with an annual turnover of less than $5 billion for new assets or $50 million for used assets. As a result, any qualifying vehicles purchased, delivered and first used for your business this financial year could be 100% written off on your tax return.


What is Temporary Full Expensing (TFE)?

Temporary Full Expensing is the bigger and better version of the Instant Asset Write Off. It was introduced as a means to support business and encourage investment, by allowing a business to claim an immediate deduction for the business portion of an asset. TFE is coming to an end on 30 June 2023, at which point, the Instant Asset Write Off will return (which provides lower thresholds of eligibility and tax benefits).

What is the benefit?

An immediate deduction of a capital asset is deducted from taxable income, resulting in a cash flow benefit relative to the rate of taxation. It's worth noting that while some may believe that a claim back will result in an equivalent tax refund, this is not the case. The actual tax benefit amount is based on the marginal tax rate of a taxpayer.

Cars such as sedans and SUVs that are eligible can have the business portion of the asset cost immediately deductible, up to the car depreciation limit of $64,741. Commercial vehicles (generally, utes and vans) do not have a depreciation limit.



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