Instant Asset Write-Off and Motor Vehicle Deduction Changes as at 1st of Jan 2014 to 11th of May 2015.

Instant Asset Write-Off and Motor Vehicle Deduction Changes as at 1st of Jan 2014 to 11th of May 2015.

Version Applies to: AssetManager Pro 2015 (v4.0) or later.
Business Type Effected: Small Business Entity (SBE)
Depreciation Effect: Tax Depreciation
Period of Effect: 1st Jan 2014 to 11th of May 2015.

Overview

On the 2nd September the repeal of the Minerals Resource Rent Tax and other related measures was passed through both houses of parliament. That included the repeal of the provision allowing small businesses to instantly write-off certain assets and accelerated deduction for motor vehicles.

Instant Write-Off of Assets Costing Less than $6.500 (Change to $1,000)

Previously (from the 2012–13 income year) small businesses have been able to write-off depreciating assets costing less than $6,500 in the income year in which they start to use the asset, or have it installed ready for use. They could also depreciate most other assets in the general small business pool at a rate of 15% in the first year and 30% thereafter.

With the legislation enacted, the threshold will change and only assets costing less than $1,000 (acquired and installed ready for use after 31 December 2013) will be eligible for immediate write-off. Assets costing $1,000 or more will need to be depreciated in the general small business pool.

Assets costing less than $6,500, acquired and installed ready for use by the small business between 1 July 2013 and 31 December 2013, will still be eligible to be immediately written-off.


$5,000 Immediate Deduction for Motor Vehicles Removed

The $5,000 immediate deduction for motor vehicles acquired by small business entities (SBEs) has also been removed from 1 January 2014.

SBEs had until 31 December 2013 to qualify for the $5,000 immediate deduction by acquiring and using a motor vehicle over the value of $6,500 by this date. 

For taxpayers that have already lodged their tax return and claimed the immediate deduction for a motor vehicle purchased after 1 January 2014, the tax return will need to be amended.   No penalties will apply if the amendment is made in a “reasonable time”.