The option to pool assets is available when calculating depreciation for tax purposes in MYOB Client Accounting - Assets.
Assets allocated to a small business pool will be depreciated at:
15% in the first year for newly acquired assets
30% in subsequent years (including previously depreciated assets)
Depreciation is calculated for the full financial year/period, regardless of when the asset was acquired during the year.
MYOB Assets applies the ATO's simplified depreciation rules for small business pooled assets automatically.
This means if the pool balance (prior to deprecation) is below the threshold, Assets will automatically write-off the pool balance, regardless of whether your client is eligible to claim a deduction under these rules.
The ATO allows you to choose whether to use the simplified depreciation rules if you have a small business with an aggregated turnover of less than:
- $500 million (from 12 March 2020 onwards)
- $50 million (from 7.30 pm on 2 April 2019 to 11 March 2020)
- $10 million (from 1 July 2016 to 7.30 pm on 2 April 2019)
- $2 million for previous income years.
If your client is not eligible to claim a deduction under the Simplified Depreciation rules, avoid allocating assets to the Small Business pool.
For information on how to create a small business pool or add an asset to the pool, see our topic on Pooled assets.
Simplified depreciation rules
The simplified depreciation rules are an alternative way to the uniform capital allowances method, of calculating depreciation.
Under these rules, depending on dates you can:
- immediately deduct the business portion of eligible depreciating assets that cost less than the relevant threshold in the year the asset was bought and used, or installed ready for use.
- pool the business portion of other eligible depreciating assets that cost the threshold amount or more in a small business asset pool
- write-off the balance of your small business pool at the end of an income year if the balance, before applying any other depreciation deduction, is less than the threshold amount.
When using the simplified depreciation rules, you must apply them to all the assets that the rules apply to.
Accelerated depreciation rules
In March 2020, the ATO introduced an option for you to deduct the cost of depreciating assets at an accelerated rate. This is an incentive to businesses with aggregated turnover of less than $500 million for the 2019–20 and 2020–21 income years.
This applies to taxation only, not accounting. The accelerated rate isn't applied automatically; you need to decide if you're eligible for the rate and apply it yourself.
If you choose to use the accelerated depreciation rate, the following rules will apply to the asset:
- The asset will be added to the general small business pool.
- In the year that you add the asset to the pool, depreciation will be deducted at 57.5%, rather than 15% of the business portion of the new asset.
- In later years, the asset will be depreciated as part of the general small business pool rules, at 30%.
Calculating pool balance and write-off threshold
See instant asset write-off thresholds on the ATO website for more information.
If the pool balance for the year (calculated prior to depreciation) falls below the pool write off threshold, the entire small business pool will be written off:
|Date range||Threshold for each asset|
12 March 2020 to 31 December 2020
For eligible businesses with an aggregated turnover from $10 million to less than $500 million, the $150,000 threshold applies for assets purchased from 7.30pm (AEDT) on 2 April 2019 but not first used or installed ready for use until 12 March 2020 to 31 December 2020.
|2 April 2019 (7.30pm AEDT) to 11 March 2020||$30,000|
|29 January 2019 to 2 April 2019 (prior to 7.30pm AEDT)||$25,000|
|12 May 2015 (7.30 pm AEDT) to 28 January 2019||$20,000|
|1 January 2014 to 12 May 2015 (prior to 7.30pm AEDT)||$1,000|
|1 July 2012 to 31 December 2013||$6,500|
|1 July 2011 to 30 June 2012||$1,000|
MYOB Assets calculates the pool balance as follows:
|Example A||Example B|
|Opening Written Down Balance||$ 18,500||$28,500|
|ADD: Taxable value of asset added this year||$ 500||$ 3000|
|LESS: Taxable termination value of assets disposed of||$ (1,500)||$ (500)|
|Pool Balance||$ 17,500||$ 31,000|
|Closing written down value of pool|
In example A, the depreciation expense is $17,500 whereas the depreciation expense for Example B is $5,850.
Certain assets can be immediately written off where:
- the asset is acquired between 1 July 2011 and 30 June 2012 and cost less than $1,000.
- the asset is acquired between 1 July and 31 December 2013 and cost less than $6,500.
- the asset is acquired between 1 January 2014 and 12 May 2015 (before 7.30pm AEDT) and cost less than $1,000.
- the asset is acquired between 12 May 2015 (after 7.30pm AEDT) and 28 January 2019 and cost less than $20,000.
- the asset is acquired between 29 January 2019 and 2 April 2019 and cost less than $25,000.
- the asset is acquired after 7.30pm (AEDT) on 2 April 2019 and cost less than $30,000.
- the asset is acquired after 12 March and cost less than $150,000.
When attempting to add an eligible asset to the pool, Assets will prompt you to create the asset as an immediate deductible asset instead.
Changing Private Use % of a pooled asset
If the private use of a pooled asset changes, Assets will make an adjustment to the pool so that the correct amount of depreciation is claimed.
This is only done if the private use changes by more than 10% and only in the first 4 years after purchasing the asset.
If you are loading assets from say another accountant’s schedule of assets, or from another accounting system, you can select the Asset came from an existing SB Pool checkbox. This will ensure that the pool total is not reduced again by the private use, and will also ensure that the correct journals are raised.
See the ATO for further information.
Eligible pooled assets
For some assets, you can elect whether or not to add them to a small business pool. However, once you make a choice you cannot change it. Examples of these may include:
assets used in primary produce
assets held before 1 July 2001.
Certain assets do not qualify to be added to a small business pool. These may include:
assets you rent or lease to others
assets allocated to a low value pool
Adding a motor vehicle (MV) to the pool
For motor vehicles added to the pool before 31 December 2013, the first $5,000 will be written off.
Any balance over this amount depreciates at 15% in the first year.
If an asset is added to the pool on or after 1 January 2014, the $5,000 immediate write off does not apply. In this case, the motor vehicle will be depreciated 15% in the first year and 30% each year after.
More information on Simplified Depreciation for small businesses is available in the ATO's Guide to Depreciating Assets.