Income and deductions for small business

Simplified depreciation rules concession

Under the simplified depreciation rules, you can:

• immediately write off most depreciating assets costing less than $1,000 each
• pool most other depreciating assets with an effective life of less than 25 years in a 'general small business pool' and claim a 30% deduction for them
• pool most other depreciating assets with an effective life of 25 years or more in a 'long life small business pool' and claim a 5% deduction for them
• claim a deduction for most assets you have newly purchase or acquired at either 15% or 2.5% in the first year, regardless of when you purchased or acquired them during that year.

For certain depreciating assets, you must use the uniform capital allowance rules rather than the concessional rules.

Example - simplified depreciation - general small business pool

Calculation of general small business pool balance		Depreciation claim
Closing pool balance	$10,000
Opening pool balance (equal to your prior closing balance)	$10,000
Add new asset purchases	$1,000
Subtotal	$11,000
Less
Proceeds of disposal	$4,000
Subtotal	$7,000
Pool deduction claim (30% x $10,000)	$3,000	$3,000
Subtotal	$4,000
New asset deduction claim (15% x $1,000)	$150	$150
		$3,150
Closing pool balance	$3,850

For more information about small business concessions: see Small business entity concessions - home refer to Concessions for small business entities.

Sections within Plant and equipment (depreciation)

• Simplified depreciation rules concession
• Uniform capital allowance rules
• Comparing prime cost and diminishing value methods
• Working out the depreciation - prime cost method
• Working out the effective life of an asset
• Use a low-value pool
• What is a low-cost asset?
• What is a low-value asset?
• Other capital expenditure