In the 2023-2024 financial year, I purchased two software programs and would like to check my understanding on the correct way to claim for them on my tax return.
Software purchased:
- Cost $791.28, purchased 01/12/2023, Business use: 100%
- Cost $366.03, purchased 12/05/2024, Business use: 100%
I'm a sole trader and have determined:
- My income is PSI, I've self-assessed myself as a PSB, and the PSI rules do not apply to me.
- My aggregate turnover is a lot less than $1 million
My understanding is that software is considered a depreciating asset and should be claimed over 5 years using the Prime Cost Method, meaning that I should claim the following amounts each year:
- 2023-2024 Financial year
- Software 1: $92.35
- Software 2: $10.03
- 2024-2025, 2025-2026 & 2026-2027 Financial years
- Software 1: $158.26 each year
- Software 2: $73.21 each year
- 2027-2028 Financial year
- Software 1: $158.69
- Software 2: $73.41
- 2028-2029 Financial year
- Software 1: $65.46
- Software 2: $62.96
Is that correct?
Or would I be eligible for simpler depreciation and the $20,000 instant asset write-off described on the pages below?
Instant asset write-off for eligible businesses | Small Business Support - $20,000 instant asset write-off
Either way, in which section should I deduct the expenses for the software I purchased?
- Under Non-primary production - Business expenses
- Depreciation expenses - manually calculated
- All other expenses - manually calculated
- Under Other business and professional items
- Small business entity simplified depreciation
- Deduction for certain assets
- Deduction for general small business pool
- Other
- Intangible depreciating assets first deducted
- Other depreciating assets first deducted
- Small business entity simplified depreciation
I would appreciate any advice you might be able to offer me.
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