News & Publications

01

Simplified depreciation for small businesses

SMEs can choose to use the simplified depreciation rules if it is a small business with an aggregated turnover (the total normal income of the business and that of any associated businesses) of less than:

$10 million from 1 July 2016 onwards
$2 million for previous income years.

Simplified depreciation rules for small businesses include:

an instant asset write-off for assets that cost less than the relevant threshold
a general small business pool for assets that cost the same or more than the relevant threshold, which has simplified calculations to work out the depreciation deduction

02

Instant Assets Write-off

Under instant asset write-off eligible businesses can:

immediately write off the cost of each asset that cost less than the threshold
claim a tax deduction for the business portion of the purchase cost in the year the asset is first used or installed ready for use.

Instant asset write-off can be used for both new and second-hand assets.

From 12 March 2020 until 30 June 2020 the instant asset write-off:

threshold amount for each asset is $150,000 (up from $30,000)
eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million)

03

Motor vehicle expenses

“Cents per kilometre method” can be used if you are a sole trader & your business kilometres are less than or equal to 5000 KM per car per year. You can claim a maximum of 5,000 business kilometres. Travel from home to business location or work should not be counted as business kilometres

Eg : 5000 KM x 0.68 = AUD 3,400.00

"Log book method" - To use this method you should have maintained records of your business kilometres & other kilometres

Eg : Suppose your total kilometers for 2019/2020 period is 90,000 & out of this 35,000 KM belongs to your business, then the percentage is 38% (35/90). Therefore you are allowed to deduct 38% of your car expenses. If your business related car expenses such as fuel & oil, registration & insurance, repair cost comes to $ 21,000, then you are allowed to deduct $ $ 7,980 (21000 x 38%)