1. Instant asset write off threshold

Previously you were able to claim an outright deduction/ write off, of depreciating assets purchased that cost up to $1,000.00. The ATO has increased this instant deduction threshold for depreciating assets up to a purchase cost of $6,500.00.

This will allow a greater tax deduction at the time of purchasing smaller, depreciating assets, rather than spreading the deduction over numerous years.

2. Accelerated depreciation for motor vehicles

When purchasing company/ work motor vehicles, you can now depreciate them by $5,000 immediately PLUS 15% on the remaining motor vehicle value under the general small business pool. The remaining amount is depreciated in the 2nd and subsequent years at 30% under the general pool. For example, ABC Pty Limited purchased a new motor vehicle for $44,000 including GST. The depreciation in 2012-2013 would be:

These new rules may or may not give you a better first year education than from the previous depreciation rules, as it depends on the value of the motor vehicle being purchased and the method previously used to depreciate the motor vehicles (prime cost or diminishing value).

3. Simplified Pooling

As from 2012-2013, most depreciating assets that cost more than $6,500 can be “pooled” and deducted at a single rate of 30%, regardless of their estimated effective life. The only exception to this is for newly acquired depreciating assets as they are depreciated at 15% in the first year, and 30% in subsequent years.

These changes will make it easier for businesses and tax agents to calculate depreciation deductions each year on general depreciating assets.

Please note that these rules only apply to entities classified as small businesses for tax purposes. A small business is one that has an aggregated annual turnover of $2 million or less.