Small Business Entities & Simplified Rules of Depreciation

As a Small Business Entity you have the ability to choose to use simplified depreciation rules. Under these rules you can

  • 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 bought and used, or installed ready for use from 7.30pm (AEST) on 12 May 2015 until 30 June 2017
  • 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.

* The current instant asset write-off threshold is $20,000. 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).

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