A lift in benefit: Recent measures for depreciating assets used for R&D purposes

Tax Insights

Over the past 12 months, including due to the COVID-19 economic downturn, a number of measures have been introduced by the Federal Government to provide greater access to tax deductions relating to depreciating assets. tangible depreciating assets

The manner in which the new legislation has been introduced potentially modifies the amounts allowable for the R&D Tax Incentive for depreciating assets and increases the amounts claimable in earlier years of the asset (including instant write-off).

Prior to the recent measures, it has been well established that tangible depreciating assets used in R&D will generally only attract benefits relating to the decline in value of such assets and will not attract the benefits associated with instant asset write-offs (whether or not the entity is a Small Business Entity). The new measures potentially provide an avenue for accelerated notional deductions under the R&D Tax Incentive program, where a company purchases tangible depreciating assets for R&D purposes. It is noted that there are no modifications to the balancing adjustment rules (e.g. on selling the asset).

Subject to all of the detailed eligibility rules, we provide key summaries of potential opportunities for R&D related tangible depreciating assets acquired by small and medium-sized businesses. Intangible assets are already able to be claimed upfront in many instances for the purpose of the R&D Tax Incentive.


For more information

If you require further information regarding the measures introduced for greater access to tax deductions relating to depreciating assets, contact your local RSM adviser today.

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