Private ruling: Capital allowances - immediately deductible expenditure
Date of advice: 22 December 2023
Published: 12 February 2024
Ruling period: Income Year Ended 30 June 202x
Date scheme commenced: X Date

Ruling: Q1: Will the purchase of the assets qualify for Temporary Full Expensing (TFE) under Subdivision 40-BB of the Income Tax (Transitional Provisions) Act 1997 (IT(TP)A 1997)? | A1: Yes.

Relevant facts and circumstances: X Pty Ltd (X) operates a business. Turnover in the relevant financial year was below $XXm. X purchased assets in the income year ending 30 June 202x and wishes to claim a deduction under the TFE rules for those assets in the income year ending 30 June 202X.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 40-40 | Income Tax (Transitional Provisions) Act 1997 Subdivision 40-BB

Reasons for decision: Summary: The purchase of the assets will qualify for TFE under Subdivision 40-BB of the IT(TP)A 1997. | Detailed Reasoning - Detailed reasoning: Subsection 40-150(1) IT(TP)A 1997 contains the Temporary full expensing of depreciating assets measures. Entities may be eligible for Temporary Full Expensing (TFE) if they are one of the following: The rules for calculating aggregated turnover are the same as those used for the small business entity concessions. Businesses who are eligible claim a deduction when lodging their 2020-21, 2021-22, or 2022-23 tax returns. To be an eligible asset for TFE, if the depreciating asset is a second-hand asset, the aggregated turnover must be below $50 million. To be eligible for a claim under the TFE measures a taxpayer needs to be the holder of an asset in addition to using the asset, or having it installed ready for use, for a taxable purpose (Subsection 40-150(1) of the IT(TP)A1997 and Paragraph 8.12 of the Explanatory Memorandum (EM) to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020). Subdivision 40-BB of the IT(IP)A 1997 contains the TFE of depreciating assets measures. Subsection 40-150(1) provides that you are covered by division 40 for a depreciating asset if, on or before 30 June 2023: (a) you start to hold the asset; and (b) you start to use the asset, or have it installed ready for use, for a taxable purpose. (emphasis added) Paragraph 8.12 of the EM to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020 Chapter 8 - Temporary full expensing of depreciating assets states at 8.12 (underlining added): 8.12 Generally, to be eligible for the temporary full expensing incentive, a depreciating asset must be: first held, and first used or installed ready for use for a taxable purpose, between the 2020 budget time and 30 June 2022; and located in Australia and principally used in Australia for the principal purpose of carrying on a business. | Detailed Reasoning - Conclusion: X became the owner of these assets in 202x, and the requirements for TFE under Subdivision 40-BB of the IT(TP)A 1997 are satisfied. X is able to deduct the cost of these assets it acquired in the income year ending 30 June 202x.

a business with an aggregated turnover of less than $5 billion | a corporate tax entity that meets the alternative income test.