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Small business entity concessions
Small businesses can use the simplified depreciation rules as an alternative to the uniform capital allowances (UCA) rules to work out deductions for most depreciating assets.
Business means the individual, partnership, company or trust that carries on the business activity.
Small business means a ‘small business entity’, which is an individual, partnership, trust or company with aggregated turnover of less than $2 million.
New laws have passed that allow small businesses with an aggregate turnover of less than $2 million to immediately deduct assets they start to use or install ready for use, provided the asset costs less than $20,000. The general small business pool will apply to depreciating assets costing $20,000 or more. The measure will apply to assets acquired from 7.30pm (AEST) on 12 May 2015 until 30 June 2017.
For more information, see Growing Jobs and Small Business - expanding accelerated depreciation for small businesses.
In general, if you purchased and installed an asset between 1 July 2012 and 31 December 2013 you can:
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In general, if you purchased and installed an asset between 1 January 2014 and before 7.30pm 12 May 2015 you can:
In general, if you purchased and installed an asset from 7.30pm (AEST) 12 May 2015 and 30 June 2017 you can:
From 1 July 2017, the threshold is $1,000.
To apply the simplified depreciation rules for the 2014-15 income year, follow the steps below. For small business entities that have accounting periods that align with the financial year, the relevant months will be 1 July 2014 to 30 June 2015. Because the period may be different for taxpayers with substituted accounting periods, the relevant instant asset write-off thresholds have been included in the steps below.
Step 1: Work out the opening pool balance for the general small business pool, taking into account:
Step 2: Work out the taxable purpose proportion of the adjustable value for:
Step 3: Work out the taxable purpose proportion of the termination value of any assets you disposed of during the year.
Step 4: Work out your deductions for:
Step 5: Work out your closing pool balance.
Step 6: If you disposed of an asset, work out any balancing adjustment required.
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