Various measures have been introduced by the Australian Federal Government to encourage a stronger economic recovery from the COVID-19 pandemic. The Backing Business Investment (BBI) Scheme is a time limited, 15 month incentive to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Backing Business Investment Scheme
- be new and not previously held by another entity (other than as trading stock)
- be first held on or after 12 March 2020 and be first used or first installed ready for use for a taxable purpose on or before 30 June 2021
- not be an asset to which an entity has applied depreciation deductions or the instant asset write-off rules
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for up to 10 assets
Backing Business Investment Eligibility
Eligibility requirements for the BBI incentive depends on the type of business that is claiming.
Small Business Entities
Under the incentive; small businesses with an aggregated turnover up to $10 million and who use the simplified depreciation rules can place eligible assets to the general small business pool.
Small businesses can deduct an amount equal to 57.5% of the business portion of a new depreciation asset in the same financial year (instead of 15%). In following years, the asset will continue to be depreciated under the general business pool rules.
Other Business Entities
Businesses that have an aggregated turnover up to $500 million who don’t use the simplified depreciation rules may be eligible to deduct a specified amount of the qualifying asset under the BBI scheme.
The business can deduct 50% of the depreciating asset’s cost in the financial year, in conjunction with the standard rate of depreciation calculated on the remaining value after the 50 percent is deducted.
Further details on the scheme can be found on the ATO website including examples, research and development considerations and other important information.
At AssetAccountant™ our goal is to take the complexity out of fixed assets.
If you’re reading this article, you’re feeling the pain of accountants and businesses across Australia who have to scour the ATO website regularly to make sure they’re always compliant.
Happily, AssetAccountant completely automates these calculations. We constantly update our depreciation software so you don’t have to get bogged down in the details. If you would like to speak to us to understand how the BBI scheme impacts on your business’ fixed asset depreciation please contact us to find out more.
Depreciation calculations and journals for both tax and accounting methods is made easy
Now that AssetAccountant is in our app store, our customers and sales team have a cloud option for fixed asset depreciation which has a strong integration with QuickBooks Online.
Matt Pisarski - Global Business Development, Intuit Quickbooks
