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Re: Instant asset write off 2019-20

Initiate

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Replies 3

Dear ATO Officer, 

 

Could you please help confim the depreciation amount for the following three scenarios under simplified depreciation rules for eligible small business duirng 2019-20 FY , 

 

1.   Opening pool balance of 50K as at 01/07/2019 and no new asset during 19-20

2.   Zero opening pool balance as at 01/07/2019 and new asset of 50K installed ready for use on 01/08/2019

3.   Opening pool balance of 50K as at 01/07/2019 and new asset of 50K installed ready for use on 01/08/2019

 

I have tried using the "Depreciation and capital Allowance tool" from ATO website, the 1st and 2nd senarios returned 50K depreciation ( fully written off) and the third scenario returned 100K deprecation ( also fully written off) using the ATO tool ,  but I thought assets costing 30K or more installed ready for use before 12/03/20 would still need to allocated to the General smal business pool and depreciated at 15% for the 1st year , is the ATO calculator up to date?

 

Thank you very much for your help

Regards, 
Steven

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hi @TheOtherUs,

 

Small businesses can choose to use the simplified depreciation rules. You don't have to - you can use the general depreciation rules if you would prefer.

 

But if you do choose to use the simplified depreciation rules, you must:

  • use them to work out deductions for all your depreciating assets except those specifically excluded, and
  • apply the entire set of rules, not just individual elements (such as the instant asset write-off).

 

This means if you do choose the simplified depreciation, you must:

  • use the instant asset write-off on all eligible assets
  • use the small business pool for items which are exceed the instant asset threshold, and
  • write-off the balance of the pool at the end of the financial year if it is less than the instant asset write-off threshold.

This includes accelerated depreciation, which is a part of the small business pool.

3 REPLIES 3

ATO Community Support

Replies 2

Hi @ranma21,

 

After pondering your question for the entirety of the afternoon so far, I've worked it out!

 

Assuming the business is eligible for simpler depreciation for small business, the reason these will all result in the whole amount being instantly depreciated is because the instant asset write-off threshold is currently $150,000, and, for the small business pool

 

Small businesses can deduct the balance of the small business pool at the end of the income year if the balance at that time (before applying the depreciation deductions) is less than the instant asset write-off threshold.

 

So, even though the assets weren't less than the instant asset write-off threshold at the time, because the small business pool balance at the end of the year is less than the current instant asset write-off threshold, it means the whole thing gets deducted.

 

How cool is that? Smiley Happy

Enthusiast

Replies 1

Hi @BlakeATO ,

 

When talking about what happens to the small business pool at the end of the income year, you have stated (in italics) "Small businesses can deduct...".

 

Are you saying that the pool CAN be deducted if you choose to and not deducted if you choose not to?

 

Or do you mean that people CAN choose to use simplified depreciation rules and then, if they choose to do so, then they:

- MUST use IAWO for eligible assets (and for ALL eligible assets over $100) depending on the IAWO threshold at purchase/first-use time, and

- MUST use the small business pool for eligible assets over the IAWO threshold at purchase/first-use time, and

- MUST write off the small business pool if the balance at year end is less that the IAWO threshold at year end...?

 

And is Accelerated Depreciation (whether adding assets over IAWO threshold to small business pool if using simplified depreciation rules, or adding assets over $1k if using general depreciation rules) optional or mandatory?  The ATO website mentions "CAN" for this.  But do we HAVE to use it even if we are fully eligible to do so...?

 

Thank you.

 

Most helpful response

ATO Community Support

Replies 0

Hi @TheOtherUs,

 

Small businesses can choose to use the simplified depreciation rules. You don't have to - you can use the general depreciation rules if you would prefer.

 

But if you do choose to use the simplified depreciation rules, you must:

  • use them to work out deductions for all your depreciating assets except those specifically excluded, and
  • apply the entire set of rules, not just individual elements (such as the instant asset write-off).

 

This means if you do choose the simplified depreciation, you must:

  • use the instant asset write-off on all eligible assets
  • use the small business pool for items which are exceed the instant asset threshold, and
  • write-off the balance of the pool at the end of the financial year if it is less than the instant asset write-off threshold.

This includes accelerated depreciation, which is a part of the small business pool.