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In the 2006-07 Federal Budget the government announced further changes to the STS which will apply from the start of the 2007-08 income year.
These proposed changes will increase the STS average turnover threshold to $2 million and remove the $3 million depreciating asset test from the STS eligibility requirements.
The STS contains its own simplified capital allowances 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: 27 Aug 2007QC 27892