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Simpler depreciation for small business
March 2018

You can choose to use the simplified depreciation rules if you have a small business with an aggregated turnover (the total normal income of your business and that of any associated businesses) of less than:

  • $10 million from 1 July 2016 onwards
  • $2 million for previous income years.

Under these rules, you:

  • immediately write-off – deduct their full cost in the year you buy them – most depreciating assets that cost less than $20,000 (see note 1) each that were bought and used, or installed ready for use from 7.30pm (AEST) on 12 May 2015 until 30 June 2018
  • pool most other depreciating assets that cost $20,000 or more in a small business asset pool and claim
    • a 15% deduction in the first year (regardless of when you purchased or acquired them during the year)
    • a 30% deduction each year after the first year
    • write-off the balance of your small business pool at the end of an income year if the balance – before applying any other depreciation deduction – is less than $20,000.

Note: The current instant asset write-off threshold is $20,000. This threshold has been extended until 30 June 2018. It has changed over the last few years (see Instant asset write-off).

If you choose to use the simplified depreciation rules, you must:

  • use them to work out deductions for all your depreciating assets except those specifically excluded
  • apply the entire set of rules, not just individual elements (such as the instant asset write-off)
  • only claim a deduction for the portion of the asset used for business or other taxable purposes – not for the portion for private use.

If you choose to stop using the simplified depreciation rules or become ineligible to use them, you must then use the general depreciation rules. However, any assets in your small business pool will continue to be depreciated in the pool, even if you stop using the simplified depreciation rules.

 

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