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Small business set to benefit from depreciation changes

Tax law changes for small business depreciation will benefit 2.7 million small businesses. Taking effect from 1 July, 2012 changes include:

  • Instant write-off threshold - An increase of the small business instant write-off threshold from $1,000 to $6,500. Allowable items may include photocopiers, laptops, fridges, and desks.
  • Other depreciating assets - Small businesses will be able to write-off all other depreciating assets in a single depreciating pool at a rate of 30 per cent.
  • Motor vehicle write-off - Small businesses will be able to claim an immediate write-off of $5,000 for motor vehicles acquired during the 2012 – 13 year.

With the changes:

  • Small businesses can allocate a purchase vehicle to the small business pool then immediately write-off up to $5,000 for vehicles costing $6,500 or more, for the year they first start to use the vehicle.
  • Along with the instant $5,000 write-off businesses can depreciate the remaining value of the vehicle through the general small business pool at 15 per cent for the first year and 30 per cent for the following years.

The changes above will simplify small business depreciating rates and should assist small businesses with tax flow and streamline the compliance process.

This article was published in the Winter 2012 Horizon. For a pdf version of the newsletter please click here.