Q: A business client had a turnover of $4 million for both the 2016 and 2017 financial years. For the 2017 financial year, can they use the simplified depreciation rules for small businesses? If yes, and they have individual assets valued at less than $20,000 on July 1, 2016, can these assets be immediately written off, or do they all need to be put into a general pool?
A: Since July 1, 2016, the turnover threshold for small businesses has increased from $2 million to $10 million. This means that if the business's total turnover is less than $10 million, they can use the simplified depreciation rules. Under these rules, they can write off the balance of their small business pool at the end of the income year if it's less than $20,000 before any other depreciation deductions. This $20,000 limit applies to the total of all assets. So, if all assets have a value of less than $20,000, the entire pool can be written off. However, if some individual assets are less than $20,000 but the total pool value is more, those assets must be put into a small business pool and depreciated at 30% per year until the pool balance is under $20,000.
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