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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.
In the 2015 Budget, the Government announced its intention to 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 small business simplified depreciation pool will apply to assets costing $20,000 or more. The measure will require legislation and will apply to assets acquired from 7.30pm on 12 May 2015 until 30 June 2017.
At the time of publishing, these changes had not yet become law. 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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To apply the simplified depreciation rules for the 2013-14 income year, follow these steps:
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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