You may be able to claim a deduction for the decline in value of low-cost and low-value assets that you:
- used in the course of producing income you show on your tax return, and
- allocated to what is called a low-value pool.
Low-cost assets are depreciating assets that cost less than $1,000.
Low-value assets are depreciating assets that are not low-cost assets but which, on 1 July 2015, had been written off to less than $1,000 under the diminishing value method.
You can have only one low-value pool. Once you choose to allocate a low-cost asset to a low-value pool, you must allocate to the pool all other low-cost assets you hold in that year and in future years. Assets you can allocate to a low-value pool include assets you use:
- in your work as an employee, or
- to gain rental income.
When you allocate an asset to a low-value pool, you must make a reasonable estimate of the percentage you will use the asset to produce your assessable income over its effective life (for a low-cost asset) or remaining effective life (for a low-value asset). This estimate is called your taxable use percentage for the asset.
Claiming a deduction
If you claim the deduction at this section, do not claim it at as a work-related expense or rental expense.
You must claim your deduction at the Business income or losses section if your low value pool contains only assets used in business and not for any other income producing purpose.
You work out your low-value pool deduction using a diminishing value rate. A rate of 37.5% is generally applied to the pool balance. However, a rate of 18.75% (that is, half the normal pool rate), is applied to the taxable use percentage of:
- the cost of each low-cost asset you allocate to the pool this income year
- any additional capital costs (such as improvements) you incur this income year for assets you allocated to the pool in an earlier income year and for low-value assets you allocate to the pool this income year.
For more information, see low-value pool.
Completing this section
- To work out your total low-value pool deduction, you can use:
- the Depreciation and capital allowances tool, or
- worksheet 1.
- If you used worksheet 1:
- enter the amount at (i) from worksheet 1 into the Total decline in value deduction field
- use worksheet 2 to work out the closing balance
- keep a record of your 2015–16 closing balance for next year's tax return.
- Select Save.
- Select Save and continue.
Note: If you used the Depreciation and capital allowances tool, fields containing information from the tool cannot be directly adjusted in myTax. To make any adjustments to this information, or to add new assets to the tool, select the 'Work it out' link.Instructions on completing your individual tax return using myTax.