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  • Simplified depreciation rules and instant write-off for small business

    31 July at 09:41 from atlas

    Small businesses can use the simplified depreciation rules as an alternative to the uniform capital allowances (UCA) rules to work out deductions for most depreciating assets.

    Business means the individual, partnership, company or trust that carries on the business activity.

    Small business means 'small business entity', which is an individual, partnership, trust or company with aggregated turnover of less than $2 million.

    In general, you can:

    • immediately write off most depreciating assets costing less than $1,000 each (low-cost assets)
    • pool most other depreciating assets with an effective life of less than 25 years, such as motor vehicles and computers, in a general small business pool and depreciate at the rate of 30%
    • pool most depreciating assets with an effective life of 25 years or more, such as wharves and cement silos, in a long-life small business pool and depreciate at the rate of 5%, and
    • depreciate most newly acquired assets at either 15% or 2.5% in the first year, regardless of when they were acquired during that year.

    Each pool is depreciated as a single asset.

    Assets to which these rules apply

    Some assets are excluded from the simplified depreciation rules. If you choose to use the simplified depreciation rules, you must use them to work out deductions for all your depreciating assets that the rules apply to.

    If you have non-business income, such as salary and wages, you will also claim a deduction for depreciating assets you use in earning your employment income under these simplified depreciation rules.

    instant asset write-off


    On 2 May 2010, the government announced instant asset write-off and simplified depreciation changes for small business.

    The changes will enable eligible small businesses to write-off depreciating assets costing less than $5,000 in the income year in which they start to use the asset, or have it installed ready for use.

    This amount was subsequently increased to $6,500 as part of the carbon pricing announcements.

    It also allows for most other assets to be depreciated in a single pool at a 30% rate. The change applies from the 2012-13 income year.

    This measure received royal assent on 29 March 2012.


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