Instant asset write-off and simplified depreciation
On 5 September 2014 the Minerals Resource Rent Tax Repeal and Other Measures Act 2014 received royal assent. The repeal of the provision allowing small business entities to instantly write-off certain assets is one of the related measures included. For most taxpayers, the changes to this related measure will apply from 1 January 2014.
For the 2012–13 income year small business entities were able to write-off depreciating assets costing less than $6,500 in that income year if they started to use the asset, or had it installed ready for use, for a taxable purpose. They could also depreciate most other assets in the general small business pool at a rate of 15% in the first year and 30% thereafter.
From 1 January 2014, the threshold will change and only assets costing less than $1,000 (that the entity starts to use or have installed ready for use, after 31 December 2013) will be eligible for immediate write-off. Assets costing $1,000 or more will need to be depreciated in the general small business pool.
Assets costing less than $6,500, that the small business entity starts to use or have installed ready for use, between 1 July 2013 and 31 December 2013, will still be eligible to be immediately written-off.
However, the application date for small business entities who use a substituted accounting period may be 1 January 2013. Please see below for further information.
The changes also modify the rules for writing-off of low pool values. The value of a small business entity’s general small business pool needs to be less than $1,000 at the end of the 2013-14 income year for the small business entity to claim a deduction for the entire value of the pool.
Source:- www.ato.gov.au
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