Depreciation Schedule – 2015 Federal Budget Announcement
As part of the 2015 Federal Budget announcement, small business received a lift in their asset write off.
The instant asset write off lifted from $1,000 to $20,000. This took effect from 7:30pm on the 12 May 2015 and will continue until 30 June 2017.
It seems the government made sure most small business entities would qualify. As the increase threshold applies to businesses’ whose aggregated turnover is less than $2 million.
If you are thinking of taking advantage of the depreciation schedule before the end of financial year, you will need to know which depreciable assets the threshold applies to.
The new threshold applies to all new or second-hand assets recorded in the depreciation schedule.
There are some assets however, which do not qualify.
This sounds strange, but you also need to consider to what price you are able to claim. This will depend on whether your business is registered for GST or not.
- Businesses registered for GST can purchase assets up to $22,000 (including GST).
- Businesses not registered for GST will quality with purchases up to $20,000 (including GST).
- The cost of the asset must be below $20,000. Therefore a $25,000 vehicle with (lets say) a 50% business use would be ineligible.
So what about other depreciable assets?
A normal depreciation schedule has rules which will apply to small business entities with depreciable assets exceeding the threshold.
SBE can elect to use of pooling arrangements and depreciating schedule for cost of assets at 15% in the first year and 30% each year thereafter.
The low pool value threshold has also increased to $20,000. An immediate deduction is available if the asset pool balance is less than $20,000 (12 May 2015 – 30 June 2017)
Don’t be fooled!
If you are thinking about applying for an ABN to qualify for the $20,000 assets write off, be aware the ATO will most likely create an audit and monitor new ABN applications for contractors (who are otherwise employees).
Do you need to know more about the Depreciation Schedule – Give the Booksenz team a call at 0439 821 095