Capital allowances: low-cost assets – threshold rule for small business

What is the threshold rule?

The threshold rule allows you to claim an immediate deduction for most business expenditure of $100 or less to buy tangible assets.

The rule is meant to help you save time because you do not need to decide whether each purchase is of a revenue nature (and so immediately deductible) or of a capital nature (usually written-off over time).

Purchases of a revenue nature normally mean that you expect the item to be consumed, damaged or lost within a short period of time while purchases of a capital nature generally result in the item or asset being used over a longer period.


If you are using the simplified depreciation rules, generally you will not use the threshold rule that applies for tax administrative purposes, to low cost items of $100 or less. Under the simplified depreciation rules you can claim an immediate deduction for most depreciating assets costing less than $1,000 prior to 7.30pm (AEST) on 12 May 2015, and less than $20,000 for assets acquired and installed ready for use, after that date and up until the end of 30 June 2017.

You can use the simplified depreciation rules if you are a small business entity (2007-08 and later years).

You must use the simplified depreciation rules for income years where you were in the simplified tax system (2006-07 and earlier years).

For more information see

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    Last modified: 19 Jun 2015QC 17149