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  • Simplified depreciation – rules and calculations

    This information is for bookkeepers, tax practitioners and others who are applying or advising on the simplified depreciation rules for small businesses.

    It sets out the detailed rules and how to calculate depreciation for eligible small businesses that have chosen to apply simplified depreciation.

    You can choose to use the simplified depreciation rules if you have a small business with an aggregated turnover of less than:

    • $10 million from 1 July 2016 onwards
    • $2 million for previous income years.
    Under these rules, if you purchased assets from 7.30pm (AEST) on 12 May 2015 and first used or installed them ready for use:

    From 7.30pm (AEST) on 12 May 2015 until 28 January 2019

    From 29 January 2019 until before 7.30pm (AEDT) 2 April 2019

    From 7.30pm (AEDT) on 2 April 2019 until 30 June 2020

    You can immediately deduct the business portion of most depreciating assets costing less than $20,000 each (the instant asset write-off threshold).

    You can immediately deduct the business portion of most depreciating assets costing less than $25,000 each (the instant asset write-off threshold).

    You can immediately deduct the business portion of most depreciating assets costing less than $30,000 each (the instant asset write-off threshold).

    The threshold reverts to $1,000 from 1 July 2020.

    If you're a business with a turnover from $10 million to less than $50 million you may be eligible for the instant asset write-off for assets purchased from 7.30pm (AEDT) on 2 April 2019. Visit the general depreciation rules for more information.

    Small businesses can also:

    • pool the business portion of most higher cost assets (those with a cost equal to or more than the relevant instant asset write-off threshold) and claim  
      • a 15% deduction in the year you start to use them or have them installed ready for use
      • a 30% deduction each year after the first year
    • deduct the balance of the small business pool at the end of the income year if the balance at that time (before applying the depreciation deductions) is less than the instant asset write-off threshold.

    If you choose to use the simplified depreciation rules, you must:

    • use them to work out deductions for all your depreciating assets except those specifically excluded
    • apply the entire set of rules, not just individual elements (such as the instant asset write-off)
    • only claim a deduction for the portion of the asset used for business or other taxable purposes – not for the portion for private use.

    If you choose to stop using the simplified depreciation rules or become ineligible to use them, you'll need to use the general depreciation rules.

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      Last modified: 26 Sep 2019QC 21100