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Business Financials – Simplified Depreciation for Small Business (under $2 mill Sales Revenue)
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Published on Tuesday, 10 May 2016 11:19
The Australian Tax Office helps small business with simplified depreciation for small business (under $2 mill Sales Revenue) in several ways. From the current ATO site (May 2016) -
You can choose to use the simplified depreciation rules if you have a small business with an aggregated annual turnover (the total normal income of your business and that of any associated businesses) of less than $2 million.
Under these rules, you:
o Immediately write-off – deduct their full cost in the year you buy them – most depreciating assets that cost less than $20,000* each that were acquired and installed ready for use from 7.30pm (AEST) on 12 May 2015 until 30 June 2017
o 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
o 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.
* The current instant asset write-off threshold is $20,000. It has changed over the last few years (see Immediate write-off).
If you choose to use the simplified depreciation rules, you must:
o use them to work out deductions for all your depreciating assets except those specifically excluded, and
o apply the entire set of rules, not just individual elements (such as the instant asset write-off).
You can choose to stop using the simplified depreciation rules or become ineligible to use them, in which case you'll 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.
More info:
o Cost
o Trade-ins
o Business vs private use
o Asset sales and disposals
o Exclusions
o Example: simplified depreciation – small business pool
o Simplified depreciation rules
Need help? Not sure? Call for FREE 30min advice / strategy session today! Aus +61 407 361 596
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