Simplified depreciation for small business

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There are two simplified depreciation rules applicable for small businesses: instant asset write-off and small business pool.

If your business has an aggregated turnover of less than $10 million, you can apply either of these two rules to depreciate your assets.

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Instant asset write-off 

Instant asset write-off enables an immediate write-off of the cost of each asset that costs less than $20,000 for the 2024FY. 

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The business portion of the cost can be claimed as a tax deduction in the year the asset is first used or installed ready for use.

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Note that the $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

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Small business pool

The business portion of assets valued at $20,000 or more can be placed into the small business simplified depreciation pool. 

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The assets in this pool will be depreciated at 

-15% in the first year

-30% in the subsequent years

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Example

Let’s say you are running a small business (less than $10 million aggregated turnover) and bought a $35,000 car and a $5,000 piece of furniture this year. Both assets were used only for business purposes and started being used during the 2024FY. 

Under the instant asset write-off rule, you can write off the full $5,000 spent on furniture, while a $35,000 car can be included in the small business pool and depreciated at 15% ($5,250)  for the first year and 30% ($8,925 =(35,000-5,250)x 30%) in the following years until the balance becomes less than the instant asset write off, the balance of the pool can then be written off.

Note that the 2024FY car depreciation limit is $68,108; hence, car depreciation expense cannot exceed this limit.  

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CTK Accounting is a full-scope accounting firm based in Wollongong, servicing clients nationally.

For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au