Business Tax Tips – 3 New Rules – Better asset deductions, motor vehicle and simplified pooling

Better asset deductions, motor vehicle and simplified pooling
3 New Rues – Better asset deductions, motor vehicle and simplified pooling

Are you aware of the new ATO rules for business asset deductions, motor vehicle accelerated deductions, and simplified pooling that are current in the 2012-2013 income year?

1.     Higher Asset write-off Threshold – $6500

Most depreciating assets up to $6500 can be FULLY claimed as an expense deduction against income (write-off), which is up from the $1000. The Australian Tax Office (ATO) gives an example – A camera is purchased $5900 and a high resolution printer $4,500. Both are fully deductible as expense in 2012-2013, used entirely for the business, as they come under the $6500 threshold.

2.     Accelerated deduction for Motor Vehicles

Purchase a motor vehicle for the business (or the proportion for business use) and claim an immediate $5000 deduction. The remainder of the cost can be claimed through the General Small Business Pool at 15% for the first year, then 30% for later years. An ATO example is purchasing a ute $37,080, used 50% for business. The calculation for depreciation in 2012-2013 is $5000 + 15% x ((50% x $37,080) – $5000) = $7,031. Note the first $5000 is also immediately claimable as well as the $7031.

3.     Simplified asset pooling

Assets over $6500 can be pooled under simplified depreciation rules and deducted at a single rate 30% each year, except for newly acquired assets – they are deducted at 15% (half the pool rate) in the first year. The former Long Life Pool (no longer exists) is rolled over as the opening balance of the general pool for 2012-2013 and depreciated at 30% instead of the former 5%.

Interestingly, the ATO site at Simplified Depreciation Rules is still dated 28 June 2012 and has the old $1000 threshold, but the new ATO site advertised on the bulletin that came with the latest BAS statements – has the latest new rules.

Tell us which will apply to your business and whether you can see a benefit for your business – comment now.

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