Simpler depreciation rules for business

The ATO has reminded small businesses with turnover of less than $2 million (i.e., small business entities or ‘SBEs’) that the depreciation rules for business assets are now simpler from the 2012/13 income year onwards.

Assets costing less than $6,500

The small business instant asset write-off threshold has increased from $1,000 to $6,500 allowing small businesses to immediately write-off most new depreciating assets costing less than $6,500.

Assets costing $6,500 or more

Depreciating assets that cost $6,500 or more (regardless of their effective life) are now added to the general small business pool and deducted at a single rate of 30%.

Newly acquired assets are deducted at 15% (half the pool rate) for the first income year.

Motor Vehicles

Small businesses that purchase a vehicle can now also claim an additional deduction of up to $5,000 in the income year it is purchased, effectively bringing forward the depreciation deduction to earlier in the vehicle's life.