The simplified tax system - a guide for tax agents and small businesses

Calculating the opening pool balance

When you first enter the STS you must calculate the opening pool balance of each pool.

The opening pool balance is the taxable purpose proportion of the adjustable values of all depreciating assets allocated to a pool.

The opening pool balance for a later income year is the closing pool balance from the previous year except where an adjustment is made to reflect the changed business use of a pooled asset.

See Calculating the closing pool balance and Exiting the STS for more information.

Example: Fi's Flowers (part 2) On entering the STS, Fiona held the following depreciating assets for use in her business: A station wagon with an opening adjustable value of $15,000. Fiona estimates that she uses the vehicle 70% of the time to produce assessable income. The taxable purpose proportion of the station wagon's adjustable value is: $15,000 x 70% = $10,500. A computer with an opening adjustable value of $3,000. Fiona estimates that she also uses the computer 70% of the time to produce assessable income. The taxable purpose proportion of the computer's adjustable value is: $3,000 x 70% = $2,100. A refrigerated cabinet with an opening adjustable value of $1,500. The cabinet is used solely for producing assessable income. The taxable purpose proportion of the cabinet's adjustable value is: $1,500 x 100% = $1,500. All of these assets have an effective life of less than 25 years. Fiona allocates these assets to the general STS pool. Fiona calculates the opening pool balance for the 2002-03 income year by adding the taxable purpose proportion of the adjustable values of the existing assets: $10,500 + $2,100 + $1,500 = $14,100 To work out her deduction for the general STS pool in the 2002-03 income year, Fiona multiplies the opening pool balance by the pool rate: $14,100 x 30% = $4,230
Asset	Adjustable value	Taxable purpose proportion	Amount added to pool
Station wagon	$15,000	70%	$10,500
Computer	$3,000	70%	$2,100
Refrigerated cabinet	$1,500	100%	$1,500
Opening pool balance			$14,100
Deduction (opening pool balance x 30%)			$4,230

Sections within STS pools

• Taxable purpose
• Calculating the opening pool balance
• Treatment of assets acquired by an STS taxpayer during an income year
• Treatment of cost addition amounts for pooled assets
• Changes in taxable purpose proportion
• Adjustment formula
• Cars
• Car limit
• Balance of pool falls below $1,000