Depreciation for small businesses

 Appreciation for Depreciation

The number of options a business has when calculating depreciation can at times be confusing. Thankfully, simplified depreciation rules are available for small businesses to use, making calculating your depreciation deduction that little bit easier. To qualify as a small business and gain access to these rules, your aggregated turnover must be less than $10 million from 1 July 2016 onwards, or less than $2 million for previous income years.


What are the simplified depreciation rules?

  1. Most depreciating assets that cost less than $20,000 each can be immediately written off. These assets need to be bought and used, or held ready for use, from 12 May 2015 until 30 June 2018. Whilst this applies up until the 2018FY, the government has proposed extending the $20,000 instant asset write-off to 30 June 2019. Watch this space.
  2. Depreciating assets that cost $20,000 or more can be pooled in a small business asset pool. A 15% deduction can be claimed the first year, and a 30% deduction is claimed each year after the first year.
  3. The balance of a small business pool that is less than $20,000 (before applying any other depreciation deduction) can be written off.

What do I need to remember when using these rules?

  1. These rules must be used to work out deductions for all of your depreciating assets, except those excluded.
  2. The entire set of rules must be applied, not just individual elements.
  3. Only the portion of the asset used for business can be claimed. Any private use must be apportioned and is not deductible.

If you need any help calculating your depreciation please call us. We can advise you on a number of ways you can minimise your tax. Bishop Collins Accountants (02) 4353 2333.