How Small Business Depreciation Rules Have Changed In 2012/2013

Calculating depreciation is one of the reasons most small businesses hire accountants, and we’re certainly not advising against that. However, changes to the depreciation rules in 2012-2013 mean it might make sense for you to purchase more expensive items before the year is out.

Notebook picture from Shutterstock

Beginning with the 2012-2013 tax year, businesses with a turnover of under $2 million can instantly write off any depreciating assets which cost $6500 or less. From a technology standpoint, that means that virtually any laptop you purchase can be written off immediately, rather than over a number of years. Many server systems would also fall under that threshold.

The limit applies to each individual item; if you purchased four $3000 notebooks for work, they would all be immediately written off, rather than being depreciated over a period of three or four years.

You still need to write off higher-priced assets over a number of years, but the rules are also simpler there; assets are added to a general pool and depreciated at 15 per cent for the first year and 30 per cent for each subsequent year. Motor vehicles used for business can claim depreciation of $5000 plus 15 per cent of the total value in the first year.

Again, once you’re running a business an accountant is a good idea, but it’s helpful to know the possibilities before you talk with them.


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