More news on the $20,000 accelerated depreciation deduction
Category : Practice Updates
The Australian Government announced a new measure in the 2015 Budget for small businesses with immediate deductibility for assets costing less than $20,000.
The measure will apply to assets acquired from 7.30pm on 12 May 2015 until 30 June 2017. You will get to claim the deduction in the year in which the asset is first used or installed ready for use.
Is the measure law yet?
No. The law to give effect to the changes has not been enacted.
Who is eligible?
Any business that meets the definition of small business entity, that is one with an aggregated turnover less than $2 million, may be eligible to immediately deduct the cost of assets acquired for less than $20,000.
Are all assets eligible?
All assets (including new and second hand) will be eligible, except for a small number of exclusions which receive different depreciation treatment.
Excluded assets include:
- Horticultural plants – subject to their own ‘uniform capital allowance’ rules (UCA);
- Capital works – subject to their own ‘capital works’ depreciation rules;
- Assets allocated to a low-value pool or software development pool – subject to the deduction rates applicable under those rules;
- Primary production assets for which the entity has chosen to use the normal depreciation rules rather than the simplified depreciation rules; and
- Assets leased out to another party on a depreciating asset lease.
GST inclusive or exclusive?
If the entity is registered for GST, then the GST exclusive amount is taken to be the cost of the asset.
Where the entity is not registered for GST, then the GST inclusive amount is taken to be the cost of the asset.
Source: Australian Taxation Office