Small businesses (i.e. those with an annual turnover of less than $2m pa) can claim an immediate deduction for assets they start to use – or have installed ready for use – provided each depreciable asset costs less than $20,000.

This measure started on 12th May 2015 and ends on 30th June 2017.

Assets that cost $20,000 or more (which can’t be immediately deducted under other provisions) are deducted over time using the general small business pool. Under the pooling mechanism a deduction for 15 per cent of the cost is allowed in the first income year with a diminishing value rate of 30 per cent deduction on the opening pool balance allowed for each income year after.

For GST registered businesses, the $20,000 is calculated on a GST-exclusive basis.

The depreciable assets purchased can be brand new or second hand and purchased in Australia or from overseas.

Examples include cars, office furniture, equipment, art work, coffee machines, etc. The important thing is the depreciable assets are purchased and used in the small business.


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