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Small businesses can immediately deduct assets costing less than $20,000 purchased since 7.30pm 12 May 2015. The asset deduction is claimed in the income year in which the asset is first used or installed ready for use.

What’s changed?

The instant asset write-off threshold has increased to $20,000 (up from $1,000). This allows an immediate deduction for the business use portion of a depreciating asset that costs less than $20,000. This applies:

  • to assets acquired after 7.30pm on 12 May 2015 until 30 June 2017
  • on a per asset basis, so several assets each costing less than $20,000 would qualify
  • to new and second hand assets

 Assets which cost more than $20,000

Assets which cost $20,000 or more (which can’t be immediately deducted under other provisions) are deducted over time using the general small business pool. Under pooling a deduction for 15 per cent of the cost is allowed in the first income year with a diminishing value rate of 30 per cent deduction on the opening pool balance allowed for each income year thereafter.

The low pool value threshold will also increase to $20,000. This means that an immediate deduction is available if the pool balance is less than $20,000 at the end of an income year.

 Primary Producers

The new laws also include changes to allow primary producers to immediately deduct capital expenditure on fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills.

 What’s not included?

Assets excluded from these depreciation rules include horticultural plants and in-house software allocated to a software development pool. In most cases specific depreciation rules apply to these excluded assets.

 Record keeping

Just like any other business asset, you’ll need to keep records to support any claims for a deduction. This includes the ongoing business use of an asset and its eventual disposal.

 

 
 
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