SMALL BUSINESS DEPRECIATION
One of the real points of difference in the policy platforms of the two major parties during the Election campaign was their respective positions on small business depreciation (a business is a “small business” if it has a turnover of less than $2 million). While the Labor party pledged to increase the instant asset write-off from its current $6 500 to $10 000, the Coalition took the opposite position and pledged to reduce the write-off. In what is a blow for small business cashflow, the new Government intends to abolish the following small business write-offs, with effect from 1 January 2014:
- $6 500 Instant Asset Write-Off will be reduced to its old rate of $1 000. Assets costing more than $1 000 will be depreciated at 15% in the year of purchase, and 30% of the remaining value per year in subsequent years.
- $5 000 Vehicle Write-Off which allows small business to claim a bonus $5 000 write-off in the year a vehicle is purchased, will be abolished altogether. Vehicles will therefore be depreciated as per normal rules (i.e. 15% in the year of purchase, and 30% of the remaining value per year in subsequent years).