Random depreciation on investments in designated assets

In 2023, it will be possible for entrepreneurs to depreciate designated (new) business assets on a one-off basis at random. By taking advantage of this, a liquidity advantage can be gained on the investment. How exactly does this work and what are the conditions? Read on quickly.

Depreciation on business assets

Business assets refer to resources purchased to run a business. From 2023, it will be possible for entrepreneurs to depreciate such assets at random once. This is allowed up to a maximum of 50 per cent of the investment. Regular depreciation is required on the remainder. By bringing the depreciation forward, there is a chance of gaining liquidity advantage from the investment. The temporary scheme applies to both corporate and income tax.

Conditions for random depreciation

To benefit from the random depreciation of business assets, a number of conditions must be met:

• They must be assets not previously used;
• The operating assets must have been put into use no later than 1 January 2026;
• Commitments have been made in respect of the purchase in 2023 or;
• Business assets for which you incurred the cost of production in 2023.

Exceptions

There are a number of assets that are excluded from the temporary scheme. These are the following business assets:

• Ships, aircraft, mopeds, motorbikes and certain passenger cars (exception cars with 0 grams of CO2 emissions per kilometre);
• Buildings; 
• Intangible assets;
• Animals;
• Assets that are largely made available to third parties;
• Assets that are already depreciated at random;
• Roads and paths open to public traffic, including bridges, viaducts, culverts and tunnels.

Want to know more about random depreciation on designated assets? Get in touch and one of our specialists will be happy to talk to you.