What can I claim as a small business?

Three changes you might have missed to the simplified depreciation rules that apply to small businesses from the 2012-2013 income year:

1. INCREASE TO INSTANT ASSET WRITE-OFF THRESHOLD

You can now claim (write off) an outright deduction for most depreciating assets purchased that cost less than $6,500 each. This has increased from $1,000.

Example:

Belinda buys a $5,500 camera and a $4,900 high resolution printer for her photography business. Both the camera and the printer are depreciating assets used entirely for business. As each cost less than $6,500, she can claim as a deduction $5,500 for the camera and $4,900 for the printer in the 2012-2013 income year.

2. ACCELERATED DEDUCTION FOR MOTOR VEHICLES

From 2012-2013 income year, if you buy a motor vehicle for use in your business, you can claim an immediate $5,000 deduction. The remainder of the cost is deducted through the general small business pool at 15% for the first year and 30% for later years.

Example:

In the 2012-2013 income year Peter bought a $37,000 ute which was used 50% for business purposes. Louie calculates his depreciation deduction for the 2012-2013 income year this way:

$5,000 + 15% x ((50% x $37,000) - $5,000) = $7,025.

3. SIMPLIFIED POOLING

From 2012-2013, most depreciating assets that cost $6,500 or more (regardless of their effective life) can all be 'pooled' under the simplified depreciation rules and deducted at a single rate of 30%. The exception is newly acquired assets (like Peter’s ute) which are deducted at 15% (half the pool rate) for the first year.

If you had a long life pool (which no longer exists), its closing balance is rolled over to form part of the opening balance of the general pool for the 2012-2013 income year (to be depreciated at a rate of 30% instead of 5%).