How do I report the value of my business stock as a lending business?

 Author: ZebN(Champion)Champion

25 July 2024

Yes. It appears the items you hire are depreciating assets. You can include the current value at items 33 & 34 however this will not affect your tax position.

The ATO has a document on the internet called "Income tax: effective life of depreciating assets (applicable from 1 July 2022)". However, I doubt this document will be helpful because it does not appear to include your type of hire items in it and because your hire business I imagine would be very idiosyncratic to your situation. In other words, you can self-assess the effective life of your depreciating assets (Section 40-105 of the ITAA 1997).

There are two methods of depreciation. The first method is called 'Diminishing Value Method', which allows claiming larger deductions in earlier years (over the effective life). The second method is called 'Prime Cost Method', which allows claiming the same deduction each year (over the effective life).

Also, the ATO often offers an "Instant asset write-off for eligible businesses". For the 2024 financial, in relation to small businesses, it was for each depreciating asset costing less than $20,000. However, I am not sure if using the instant asset write-off is compulsory.

For example, if your new partnership business made a loss or low income in its first financial year, it may not be the optimal tax treatment of your depreciating assets to write them off in the first financial year (because you are a partnership thus your distributed individual partnership income will be affected by the tax free threshold).

(In fact, I joined this forum recently for the purpose of asking the question are the immediate asset write offs compulsory and never received an answer).