The Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018 has now passed through both houses of Parliament without amendment.
The Bill makes changes to the tax law to extend by 12 months the period during which small businesses can access expanded accelerated depreciation rules for assets that cost less than $20,000. The threshold amount was due to revert to $1,000 on 1 July 2018, but will now remain at $20,000 until 30 June 2019.
Among other things:
- Small business entities will be able to claim an immediate deduction for depreciating assets that cost less than $20,000, provided the asset is first acquired at or after 7.30 pm (ACT legal time) on 12 May 2015, and first used or installed ready for use on or before 30 June 2019. Depreciating assets that do not meet these timing requirements continue to be subject to the $1,000 threshold.
- Small business entities will be able to claim an immediate deduction for depreciating assets that cost less than $1,000 if the asset is first used or installed ready for use on or after 1 July 2019.
- Further, small business entities will be able to claim a deduction for an amount included in the second element of the cost of depreciating assets that are first used or installed ready for use in a previous income year. The total amount of the cost must be less than $20,000 and the cost must be incurred at or after 7.30 pm (ACT legal time) on 12 May 2015, and on or before 30 June 2019. Costs that are incurred outside of these times continue to be subject to the $1,000 threshold.
Currently, assets that cost $20,000 or more, and costs of $20,000 or more relating to depreciating assets, can be allocated to a small business entity’s general small business pool and deducted at a specified rate for the depletion of the pool. This does not change.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the extension, but reminded small businesses and family enterprises that the instant asset write-off is a tax deduction, not a rebate – your small business needs to make a profit to be eligible to claim the benefit.
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