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Small Business Depreciation


Small Business Depreciation

Small businesses can use the simplified depreciation rules as an alternative to the uniform capital allowances rules to work out deductions for most depreciating assets.  Business means the individual, partnership, company or trust that carries on the business activity. Small business means a ‘small business entity’, which is an individual, partnership, trust or company with aggregated turnover of less than $2 million.

In the 2015 Budget, the Government announced its intention to allow small businesses with an aggregate turnover of less than $2 million to immediately deduct assets they start to use or install ready for use, provided the asset costs less than $20,000. The small business simplified depreciation pool will apply to assets costing $20,000 or more. The measure will require legislation and will apply to assets acquired from 7.30pm on 12 May 2015 until 30 June 2017.

Assets to which these rules apply

  • Some assets are excluded from the simplified depreciation rules. If you choose to use the simplified depreciation rules, you must use them to work out deductions for all your depreciating assets that the rules apply to.
  • If you have non-business income, such as salary and wages, you will also claim a deduction for depreciating assets you use in earning your employment income under these simplified depreciation rules.
  • Where you can claim a goods and services tax (GST) credit for a depreciating asset, you must deduct the amount of the GST credit from the asset’s adjustable value before working out the deduction for depreciation. The examples here use GST-exclusive figures.

Assets purchased and installed between 01/07/12 and 31/12/13

In general, if you purchased and installed an asset between 1 July 2012 and 31 December 2013 you can:

  • immediately write-off most depreciating assets costing less than $6,500
  • pool most other depreciating assets (irrespective of their effective life) in the general small business pool and depreciate at the rate of 30%
  • depreciate most newly acquired assets at 15% in the first year, regardless of when they were acquired in that year
  • claim an accelerated initial deduction for motor vehicles.

To apply the simplified depreciation rules for the 2013-14 income year please go to :- or contact the office for more information.


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