Small Business Depreciation – Changes From 1st July 2012
What happened after 1st July 2012
- The small business instant asset write-off threshold has increased from $1,000 to $6,500
- Small businesses can claim an accelerated initial deduction for motor vehicles acquired in 2012-13 and subsequent years.
- The long life small business pool and the general small business pool have been consolidated into a single pool to be written off at one rate.
These amendments only apply to you if you are a small business that has an aggregated turnover of less than $2 million. Your aggregated turnover includes the annual turnover of your small business and the annual turnovers of any connected or affiliated businesses.
From: http://www.ato.gov.au
Examples Comparison with Current Provisions:
Client: Kate’s Milk Bar, newly set up in Sep 2011
Assets: In Sep 2011, brought a new freezer cost $3,000, a stove kit cost $8,000;
In Sep 2012, brought a coffee machine cost $1,500, a second-hand ute cost $9,000 for business use only.
For 2011-2012 financial tax return, either the freezer nor the stove kit cost over $1000, it can be depreciated through the general small business pool at a rate of 15 per cent in the year of allocation, then 30 per cent in the following years. It would be worked out as:
• 2011-2012 Depreciation:
($3,000+$8,000)*15% = $1,650
During the 2012-13 income year, as the coffee machine is a depreciating asset and costs less than $6,500, the business can claim an immediate $1,500 deduction.
The business can immediately write-off up to $5,000 for vehicles costing 6,500 or more, and depreciate the remaining value of the vehicle through the general small business pool at 15 per cent for the first year and 30 per cent for the following years.
Its general small business pool opening balance is $3,000+$8,000-$1650=$9350
• 2012-2013 Depreciation:
$9,350*30% + $1,500 + $5,000 + ($9,000-$5000)*15%= $9,905
More information
For specific advice on how the changes apply to your business, please contact us.
For an appointment, or a confidential discussion of your needs, please contact our Tax Accountants today, or call 1300 627 829.
