Small business depreciation changes
Written on the 16 November 2011 by Thomson Reuters
The Government had released for comment exposure draft legislation which proposes to make various tax law amendments concerning the small business depreciation rules. The amendments are proposed to apply to small business entities as defined in s 328-110 of the ITAA 1997 that have an aggregated turnover of less than $2m for an income year. Public consultation closed on 28 September 2011.
Instant write-off of an asset
Under the proposed amendments to the ITAA 1997, the small business instant asset write-off threshold will be increased from $1,000 to $6,500. The proposed amendments will implement one of the Government's responses to the Henry Tax Review in May 2010. The Government had proposed an instant asset write-off threshold of $5,000. This figure was later increased to $6,500 when the Government announced its "Clean Energy Future Plan" in July 2011.
Simplified depreciation pooling arrangements
The proposed amendments will consolidate the long life small business pool and the general small business pool into a single pool to be written off at one rate. The changes will implement one of the Government's responses to the Henry Tax Review.
Deductions for motor vehicles
The proposed amendments propose to amend the ITAA 1997 to allow small business entities to claim an accelerated initial deduction for motor vehicles acquired from the 2012–2013 income year. The proposed amendments will implement the Government's proposal announced in the 2011–2012 Budget.
Entrepreneurs' tax offset
The proposed amendments propose to abolish the entrepreneurs' tax offset by repealing Subdiv 61-J of the ITAA 1997. This would implement the Government's proposal announced in the 2011–2012 Budget.
Author: Thomson Reuters