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

Changes in taxable purpose proportion

In certain circumstances if you change the extent to which you use a pooled asset for a taxable purpose, you will need to adjust the opening pool balance prior to calculating your pool deduction.

You must make an adjustment if the extent of the taxable purpose proportion changes by more than 10 percentage points from the estimate or any previously adjusted estimate for each asset allocated to:

• the general STS pool - for each of the first three years after the year in which it was allocated to the pool, and
• the long life STS pool - for each of the first 20 years after the year in which it was allocated to the pool.

The adjustment will ensure that the pool deduction is based on the correct estimate of the asset's taxable purpose proportion for the current and future income years.

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