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  • STS taxpayers



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    The simplified tax system (STS) is an alternative method of determining taxable income for eligible taxpayers. It began on 1 July 2001.

    You are eligible to be an STS taxpayer for an income year if:

    • you carry on a business in that year
    • you have an STS average turnover of less than $1 million in that year (the STS average turnover includes the turnover of any entities you are 'grouped with'), and
    • you, together with any entities you are 'grouped with', have depreciating assets with a total adjustable value of less than $3 million at the end of the year.

    The STS contains its own simplified capital allowance rules. If you are an eligible taxpayer and elect to enter the STS, you will generally calculate deductions for your depreciating assets using these rules.

    In general, the taxable purpose proportions of the adjustable values and second element of cost amounts of most:

    • depreciating assets costing less than $1,000 each can be written off immediately
    • other depreciating assets with an effective life of less than 25 years are pooled in a general STS pool and deducted at the rate of 30%
    • depreciating assets with an effective life of 25 years or more are pooled in a long life STS pool and deducted at the rate of 5%
    • newly acquired assets are deducted at either 15% or 2.5% (half the relevant pool rate) in the first year, regardless of when they were acquired during the year.

    The taxable purpose proportion is your reasonable estimate of the proportion you will use, or have installed ready for use, a particular depreciating asset for a taxable purpose.

    More information on working out deductions for depreciating assets under the STS rules is provided in the publication The simplified tax system - a guide for tax agents and small businesses (NAT 6459).

    Last modified: 08 Apr 2020QC 27597