April 24, 2013 by stirling

From 1 July 2012, new more generous rules apply as follows:

1. Increases Instant Asset Write-off Threshold

Small business taxpayer (SBES) can write off depreciation assets costing less than $6,500 (up from $1,000) in the income year in which they start to use the asset or have it installed ready for use. The $6,500 threshold is GST- exclusive ($7,150 GST-inclusive). This new threshold provided a major cash flow benefit to SBEs, allowing most assets to be claimed in full in the year of purchase.

2. Streamlined Pooling Provisions

The abolition of the long-life pool (with assets in this pool now going in the general pool) provides a massive cash flow advantage for SBEs. Rather than being depreciated at just 2.5% in the initial year, and 5% in subsequent years, the depreciation rate is now six times faster, sitting at 15% and 30% respectively.

3. Special Rules for Cars

SBEs can write-off $5,000 of a car costing $6,500 or more in the income year in which they start to use the car (new or second – hand). The remaining value is depreciated through the general pool at a rate of 15% in the first year and 30% in the later years. The new $5,000 instant deduction in the year of purchase will provide significant cash flow relief for SBE.