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  • Low-value pooling



    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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    From 1 July 2000, an optional low-value pooling arrangement for plant was introduced. It applied to certain plant costing less than $1,000 or having an undeducted cost of less than $1,000. This plant could be allocated to a low-value pool and depreciated at statutory rates.

    The UCA adopts most of the former rules for low-value pools. From 1 July 2001, the decline in value of certain depreciating assets can be calculated through a low-value pool.

    A low-value pool created before 1 July 2001 continues and is treated as if it were created under the UCA. The closing balance of the pool worked out under the former rules is used to start working out the decline in value of the depreciating assets in the pool under the UCA rules.

    Under the UCA, you can allocate low-cost assets and low-value assets to a low-value pool. A low-cost asset is a depreciating asset whose cost as at the end of the year in which it is first used, or installed ready for use, for any purpose is less than $1,000 (after GST credits or adjustments). A low-value asset is a depreciating asset that is not a low-cost asset but:

    • which has an opening adjustable value of less than $1,000, and
    • for which you have calculated any available deductions from a decline in value determined under the diminishing value method.

    Once you choose to create a low-value pool and a low-cost asset is allocated to the pool, you must pool all other low-cost assets you start to hold in that income year and in later income years. However, this rule does not 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.

    Once an asset is allocated to a low-value pool it is not necessary to work out its adjustable value or decline in value separately. Only one annual calculation for the decline in value for all of the depreciating assets in the pool is required.

    The deduction for the decline in value of depreciating assets in a low-value pool is worked out using a diminishing value rate of 37.5 per cent.

    The deduction for low-cost assets you allocate to the pool for the income year is worked out at a rate of 18.75 per cent, or half the pool rate. Halving the rate recognises that assets may be allocated to the pool throughout the income year and eliminates the need to make separate calculations for each asset based on the date it was allocated to the pool.

    For further information about low-value pooling, including the treatment of assets used only partly to produce assessable income and the treatment on disposal of assets from a low-value pool, refer to the Guide to depreciating assets.

    Note: If you are an individual who owns or has co-ownership of a rental property, you claim your low-value pool deduction for rental assets for 2002 at question D7 of TaxPack 2002 (not question 20 of TaxPack 2002 supplement).

    Last modified: 11 Dec 2019QC 16578