The ATO has released comprehensive guidance on claiming tax deductions for depreciating assets and capital expenses for the 2026–27 income year. The guidance clarifies the distinction between immediate deductions under simplified depreciation rules (including instant asset write-off) and deductions claimed over time under general depreciation rules. It also addresses capital expenses such as establishment costs, leasehold improvements, and blackhole expenditures.
Key Takeaways
- Instant Asset Write-off: Eligible small businesses (aggregated turnover < $10 million) can immediately deduct the business portion of assets costing less than $20,000 each, first used or installed ready for use between 1 July 2026 and 30 June 2027.
- General Depreciation Rules: Assets not eligible for instant write-off are allocated to the small business pool (diminishing value rate 30%) or depreciated individually using prime cost or diminishing value methods.
- Capital Expense Deductions: Certain capital expenditures (e.g., business establishment, project-related costs) are deductible over five years under Division 40 of ITAA 1997, provided they are not otherwise deductible or denied.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
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