From the Institute of Chartered Accountants

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From 1 July 2012 there will be significant changes to the small business depreciation rules. The amendments will apply to small business entities as defined in Section 328-110 of the Income Tax Assessment Act 1997 (Cwlth) that have an aggregated turnover of less than $2m for an income year. They are:

• Instant Write Off Threshold:  The instant asset write off for small businesses will increase from $1,000 to $6,500. Allowable items may include photocopiers, laptops, fridges and desks.
• Other Depreciation Assets:  Small businesses will be able to write off all other depreciation assets in a single depreciation pool at the rate of 30 per cent. This means they can consolidate the long life small business pool and the general small business pool into a single depreciation pool to be written off at one rate.
• Motor Vehicle Write Off: Small businesses will be able to claim an accelerated initial deduction up to $5,000 for vehicles costing $6,500 more acquired during the 2012/2013 income tax year.

These changes will provide significant opportunities to small businesses in terms of initial depreciation write offs.