21 October 2011
The Government has released exposure draft legislation and explanatory materials for the proposed changes to the depreciating rules for small business entities from 1 July 2012. The changes simplifying the existing depreciation rules for small business entities and provide a greater up-front tax benefit when new depreciating assets are acquired. The changes include:
- An immediate write-off for any depreciating assets that cost less than $6,500. Remember that for small business entities, there is no requirement to aggregate identical assets for depreciation purposes, hence this represents a substantial immediate deduction for small business clients;
- An immediate write-off of $5,000 for any motor vehicle acquired from 1 July 2012. The new rules will mean that the purchase of a motor vehicle results in a $5,000 deduction and 15% general pool depreciation deduction in the first year. The remaining written down value of the asset would be depreciated at 30% in subsequent years; and
- Removal of the long-life pool, resulting in a single depreciation rate of 30% for all assets held by small business
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