• Which depreciating assets can you allocate to a low-value pool?

    From 1 July 2001 you can allocate depreciating assets to a low-value pool that cost less than $1,000 (low-cost assets), and depreciating assets that are not low-cost assets, but:

    • have an opening adjustable value of less than $1,000
    • you have previously worked out deductions using the diminishing value method (low-value assets).

    An asset can still be a low-value asset even though it was acquired before the start of the UCA system on 1 July 2001.

    How are pre-UCA system low-value pools treated?

    A low-value pool created before 1 July 2001 continues, and will be treated as if it had been created under the UCA system. The closing balance of such a pool will be used in calculating deductions for the pool under the UCA system.

    What is a depreciating asset's adjustable value?

    An asset's adjustable value at a particular time is its cost less its decline in value up to that time. The adjustable value at the start of an income year (the opening adjustable value), is the same as its adjustable value at the end of the previous income year. The adjustable value of a newly acquired asset is generally the asset's cost.

    Are there any depreciating assets you can't allocate to a low-value pool?

    You can't allocate the following depreciating assets to a low-value pool:

    • assets for which deductions have been calculated using the prime cost method
    • horticultural plants (including grapevines)
    • assets for which you can deduct amounts under the simplified depreciation rules
    • assets that cost $300 or less for which you can claim an immediate deduction.

    Are you required to allocate depreciating assets to a low-value pool?

    No. The choice to use low-value pooling is yours. If you choose not to use low-value pooling, you work out the decline in value of low-cost and low-value assets as you do your other depreciating assets, that is, according to their effective life.

    Once you allocate a low-cost asset to a low-value pool, you must pool all other low-cost assets you start to hold in that, and each later year. However, this rule doesn't apply to low-value assets. You can decide whether to allocate low-value assets to the pool on an asset-by-asset basis.

    Once you have allocated an asset to the pool, it remains in the pool.

    See also:

      Last modified: 25 Jan 2017QC 16455