Let’s look at what to do with assets that you can’t claim an immediate deduction for because they cost the same as or more than the relevant instant asset write-off threshold amount.
These assets are allocated to your small business pool if they aren’t excluded assets (for example, capital works).
With a small business pool, you pool the taxable purpose portion of assets with a cost the same as or more than the instant asset write-off threshold.
You can then claim:
- a 15% deduction for the taxable purpose portion of the assets in the year you start to use them or have them installed ready for use
- a 30% deduction of the opening pool balance (after adjustments for changes in taxable purpose) each year after the first year.
You don’t claim separate deductions for each asset allocated to the pool.
You allocate assets to your small business pool that:
- cost the same as or more than the relevant instant asset write-off threshold amount
- you held before you used the simplified depreciation rules (other than excluded assets).
If the sum of the opening balance of the small business pool (after adjustments, plus the taxable purpose portion of any assets you add to it in an income year) is less than the instant asset write-off threshold, you can claim this amount as a deduction.
For example, in the 2023-24 income year the threshold is $20,000. If the opening balance of your small business pool is $19,950 and you don’t allocate any assets to the pool in that year, you claim a deduction for the entire pool balance. The closing pool balance for the year will be $0.
