We cannot generally claim deduction on the capital assets immediately and have to claim a deduction over the life of the asset.  You can only claim assets who aid to earn assessable income and have an expected decline in value over time. Assets such as land, trading stock, and intangible assets are not classified as depreciating assets.

The small business that has a turnover of less than $2Million can claim an immediate deduction of assets purchased after 12th May 2015 from 7:30 pm till 30th June 2017. If any assets purchases value over $1,000 prior to 12th May 2015, goes in the depreciation asset list over the life of the asset.

Depreciation deduction can only be available to the taxpayer who is the legal owner of the asset. In Partnership, the partnership not individual partner claims deprecation of the asset(s).  Cost of the asset also includes any cost you have incurred to make in the usable position to make the earning.  Other costs could be freight, installation and repairing of the asset, etc.

Also, if you use the asset for personal use, then you can claim only depreciation on the business use.  For instance, if you use 40% of the asset for personal use then you can only claim 60% of depreciation cost of an asset.

If you brought an asset from 1st July to 31st December 2013, then instant write off threshold was $6,500.

However, if you brought an asset from 1st January 2014 to 12th May 2015, then instant write off threshold was $1,000

If you have rent an asset or lease to others, then you cannot claim a deduction in simplified depreciation rules i.e. currently $20,000, instead, you should use general depreciation rules. In general depreciation, you can either use the prime cost method or the diminishing value method.  In Prime method, the decrease in value of the depreciating asset is uniform over its effective period of life. However, in diminishing value, your depreciation asset decreases more in the early years of its effective life.

To know more about Depreciation and Capital expenses and other Bookkeeping related queries, contact us – 03 9310 7871 (https://reliablebookkeepingservices.com.au)

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