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

How the threshold rule for low-cost assets of large businesses works.

Last updated 24 January 2017

The threshold rule allows a business not using the simplified depreciation rules 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 don't need to decide whether each purchase is of a revenue nature (and so immediately deductible) or of a capital nature (which is usually written-off over time).

Purchases of a revenue nature normally mean that a business expects 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.

How the $100 threshold rule works

If you spend $100 or less to acquire a tangible asset in the ordinary course of carrying on your business you can assume it to be of a revenue nature for income tax purposes.

This rule does not apply to expenditure on:

  • establishing a business or business venture or building-up a significant store or stockpile of assets
  • assets you hold under a lease, hire purchase or similar arrangement
  • assets you acquired for lease or hire to (or that will otherwise be used by) another entity
  • assets included in an asset register you maintain in a manner consistent with reporting requirements under generally accepted Australian accounting standards
  • any asset that forms part of a collection of assets that is dealt with commercially as a collection (for example, by being sold and leased-back as a means of raising finance for the business)
  • trading stock or spare parts.

This rule does not apply separately to expenditure on assets that are part of another composite asset. In this case, you must test expenditure on the composite asset. Items would not normally be a separate asset where they are not functional on their own (for example, scaffolding clamps).

Some examples of low cost items that fall within the threshold rule, subject to the qualifications listed above, include:

  • office equipment costing $100 or less – including hand held staplers, hole punches, manila folders, ring binders, geometry sets, stencils, calculators, tape dispensers, scissors, labelling machines, document holders, and bar coding machines
  • catering items costing $100 or less – including cutlery, saucers, cups, and table linen
  • tradesperson's small hand tools costing $100 or less – such as pliers, screwdrivers, and hammers
  • tools used by primary producers costing $100 or less – including secateurs and pliers.


A large mining business with an asset register buys a large quantity of small items each year to use in various sections of the enterprise. The items range from goggles and torches to small hand tools. These items cost $100 or less and are not recorded on the asset register. The items are claimed as business deductions in the year of purchase.

End of example

The$100 threshold limit and GST

The $100 threshold rule includes GST in the price of the item. There's no need to separately identify any GST applicable to individual items. Division 27 of the Income Tax Assessment Act 1997 (ITAA 1997) ensures a deduction isn't available for expenditure to the extent it relates to an input tax credit or decreasing adjustment under the GST legislation.

Record keeping requirements

The threshold rule doesn't mean record retention requirements are changed. You must continue to keep all relevant records as required under the income tax and other taxation laws.

More information

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