Simplifying tax obligations for business

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The Commissioner has released Practice Statement PS LA 2003/8 - Taxation treatment of expenditure on low cost items for taxpayers carrying on a business. This Practice Statement provides guidance on two straightforward methods which you can use if you are carrying on a business to help determine whether you treat expenditure incurred to acquire certain low-cost tangible assets as revenue or capital.

Subject to certain qualifications, the two methods cover expenditure below a threshold and the use of statistical sampling to estimate total revenue expenditure on low-cost tangible assets. The threshold rule allows an immediate deduction for qualifying low-cost tangible assets costing $100 or less (including any GST). If you have a low-value pool (see Low-value pools), the sampling rule allows you to use statistical sampling to determine the proportion of the total purchases on qualifying low-cost tangible assets that is revenue expenditure.

The Tax Office will accept a deduction for expenditure incurred on qualifying low-cost tangible assets calculated in accordance with this Practice Statement.