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What can you claim as a small business???

  • Monday, December 10, 2012

Three changes you may have missed to the simplified depreciation rules that apply from the 2012-13 income year.

Increase to instant asset write-off threshold

You can now claim an outright deduction (write-off) for most depreciating assets purchased that cost less than $6,500 each. This has increased from $1,000.

EXAMPLE 1

Annette bought a $5,900 camera and a $4,500 high resolution printer for her photography business. Both the camera and the printer are depreciating assets used entirely for business. As each asset cost less than $6,500, she can claim a deduction of $5,900 for the camera and $4,500 for the printer in the 2012–13 income year.

Accelerated deduction for motor vehicles

From 2012–13, if you buy a motor vehicle to use in your business, you can claim an immediate $5,000 deduction. You can deduct the remainder of the cost through the general small business pool at 15% for the first year and 30% for later years.

EXAMPLE 2

In the 2012–13 income year, Louie bought a $37,080 ute that he used 50% for business purposes.

Louie calculates his depreciation deduction for the 2012–13 income year this way:

$5,000 + 15% x ((50% x $37,080) - $5,000) = $7,031

Simplified pooling

From 2012–13, most depreciating assets that cost $6,500 or more (regardless of their effective life) can all be 'pooled' under the simplified depreciation rules and deducted at a single rate of 30%. The exception is newly acquired assets (like Louie's ute) which are deducted at 15% (half the pool rate) for the first year.

If you had a long life pool (which no longer exists), its closing balance is rolled over to form part of the opening balance of the general pool for the 2012–13 income year (to be depreciated at a rate of 30% instead of 5%).

PARTNERS for Generations.

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