Depreciation made simple for small business
Depreciation has been made simpler for small business in the 2012/2013 income year. There are three main changes which may impact the timing of asset purchases.
Firstly, there is an increase to the instant asset write-off threshold. You can now claim an outright deduction (also known as a write-off) for most depreciating assets purchased that cost less than $6,500 each. This has increased from $1,000.
For example, on 1 May 2013 you buy a new laptop for your business costing $1,500 and a high resolution printer for $5,000. Both the laptop and printer are used entirely for business and are depreciating assets. Each asset is less than $6,500, so you are able to claim a full deduction of $1,500 for the laptop and $5,000 for the printer for the 2013 financial year.
The second change in depreciation is in regard to the accelerated deduction in motor vehicles. From the 2012/2013 year, you can claim an immediate $5,000 deduction if you purchase a motor vehicle to use in your business. The remainder of the cost can be deducted through the general business pool at 15% for the first year and 30% for later years.
Pooling for depreciation has also been simplified for small business. From 2012-2013, most depreciating assets that cost less than $6,500 or more (regardless of their effective life) can be pooled under the simplified depreciation rules and deducted at a single rate of 30%. However, newly acquired assets (like a motor vehicle) are deducted at 15% in 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 2012/2013 income year (to be depreciated at a rate of 30% instead of 5 %.)