Small Business’s Changes To The Depreciation Rules For The 2012-2013 Income Year

  • Small Business’s… changes to the depreciation rules for the 2012-2013 income year:

1. Increase to instant asset write-off threshold

You can now claim an outright deduction (write-off) for most depreciating assets purchased that cost less that $6,500 each. This has increased from $1,000.

For Example: Annette bought a $5,900 camera and a $4,500 high resolution printer for her photography business. Both the camera and the printer are depreciating assets used entirely for business. As each asset cost less than $6,500, she can claim a deduction of $5,900 for the camera and $4,500 for the printer the 2012-13 income year.

2. Accelerated deduction for motor vehicles

From 2012-13, if you buy a motor vehicle to use in your business, you can claim an immediate $5,000 deduction. You can deduct the remainder of the cost through the general small business pool at 15% for the first year and 30% for the later years.

For Example: In the 2012-13 income year, Louis bought a $37,080 ute that he used 50% for business purposes. Louie calculates his depreciation deduction for the 2012-13 income year this way: $5,000 + 15% x ((50% x $37,080) – $5,000) = $7,031

3. Simplified Pooling

From 2012-13, most depreciating assets that cost $6,500 or more (regardless of their effective life) can all be ‘pooled’ under the simplified depreciation rules and deducted at a single rate of 30%. The exception is newly acquired assets (like Louie’s ute) which are deducted at 15% (half the pool rate) for 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 2012-13 income year (to be depreciated at a rate of 30% instead of 5%).