New changes from 2012-13 onwards:
The small business instant asset write-off threshold has increased from $1,000 to $6,500; small business can claim initial deduction for motor vehicles purchased in 2013 financial year and onwards the deduction $5,000 plus 15% of the remaining amount; the long life small business pool and the general pool have been combined into a single pool to be written off at one rate.
These changes mean small business can choose to use these rules to write off a depreciation asset that cost less than $6,500.
Example: Claiming a deduction for an asset under the new rules
During the 2012-13 financial year, A Good Food Restaurant, a small business, buys a new kitchen equipment for $5,500. As the kitchen equipment is a depreciation asset and costs less than $6,500, the business can claim an immediate $5,500 deduction for the 2012-13 financial year.
How to claim an accelerated deduction for motor vehicles?
Example: Initial deduction for a motor vehicle
ABC Construction Pty Ltd, a small business, purchase a new van for $28,000 for business purpose.
ABC Construction Pty Ltd can use the following formula to claim deduction:
($28,000-$5,000)*15%+5000=$8,450
ABC Construction Pty Ltd can claim a deduction of $8,450 for the van. If the van costs less than $6,500, it can be depreciated immediately under new rules.
From 2012-13 financial year, the long life small business pool and the general small business pool have been combined into a single pool to be written off at one rate.
Small business needs to add together the closing balance of long life and general small business pool for 2012 financial year to calculate the opening balance of your small business pool for financial year 2013.
Example: Combine of the depreciation pools for financial year 2013
ABC Construction Pty Ltd is a small business entity, At the end of the 2012 financial year, the closing balance of its long life pool was $7,000 and the closing balance of its general small business pool was $20,000.
For 2013 financial year, ABC Construction Pty Ltd’s long life pool no longer exists, however its general small business pool opening balance is now $27,000.
