How do I apply the ATO changes to SB pools in the Fixed Assets module?
This support note applies to:
- AO Classic General Ledger (AU)
Increasing the small business instant write-off threshold
From the 2012-13 income year - write off depreciating assets costing less than $6,500 in the income year in which they start to use the asset or have it installed ready for use for a taxable purpose during or before that income year
In AO Classic, you can write-off any amount when creating a new asset.
Consolidating the long life and general small business pools
Depreciating assets costing $6,500 or more are depreciated using a pooling arrangement. A pool is treated as a single depreciating asset although it is made up of the individual costs of the depreciating assets that are allocated to it. Pool deductions are calculated on a diminishing value basis at a set rate.
To simplify and streamline depreciation arrangements for small business, the long life small business pool ceases to exist after the 2011‑12 income year. The closing balance of a small business' long life pool and general small business pool for the 2011‑12 income year is to be added together to calculate the opening balance of the general small business pool for the 2012‑13 income year.
In AO Classic, the user must re-allocate all assets currently associated with the long life small business pool into the small business general pool. On the 1st July, 2012, all assets currently assigned to the long life pool need to be edited and the rate changed to 30%.
Introduction of a one-off deduction for motor vehicles purchased in the 2012/2013 and subsequent years
From the 2012-13 income year, small business entities that choose to use the capital allowance provisions in Subdivision 328-D can claim up to $5,000 as an immediate deduction for a motor vehicle in the year they start to use the motor vehicle, or have it installed ready for use, for a taxable purpose. Taking into account the amount already written off, the remainder of the purchase cost is depreciated as part of the general small business pool, at 15 per cent in the first year and 30 per cent in later years. This is an exception to the general small business capital allowance rules for depreciating assets.
In AO Classic, 2 assets will need to be created to cater for the change. The first asset will be created using immediate write-off for $6500 with the balance created as a second asset depreciated at normal rates or pooled as required.