What is the depreciation limit?

What is the depreciation limit is a very good question as it has unclear for too long.

It was all clear after 30th June 2023 that the instant asset write-off provisions for small businesses had ended.  It was great whilst it lasted (but noting the flip side that the proceeds from selling car fully written off are now fully assessable).

The depreciation limit for 2023/24 was up in the air for far too long.  Unfortunately the proposed amendment of a $30,000 limit was not passed.  So the depreciation limit for 2023/24 is $20,000 – to read about tips and traps about the $20,000 limit, please refer to our earlier blog at – https://www.mrsaccountants.com.au/asset-depreciation-claims-for-2023-24/

So what is the depreciation limit for 2024/25?

$20,000.

Who can claim these depreciation rates?

These limits are available to businesses (whether operated via a company, trust or partnership or as a sole trader in one’s own name).

The $20,000 limit also applies to an opening pool

Small businesses who have elected to use the pooling depreciation system with its high depreciation rate can also claim the pool balance when it falls below $20,000.   That is defined as being:-

  • The opening balance of the pool
  • Plus the taxable portion of acquired assets
  • Less the taxable portion of assets sold during the year.

So if your business bought an asset costing say $22,000 ex GST in 2023/24, then the opening balance of $18,700 can be written off in full in 2024/25 (assuming no other assets acquired or disposed of).

 

It is beyond the scope of this article to run through all the rules but please keep in mind that you can only claim depreciation from when an asset is installed and ready for use.

Please don’t hesitate to contact us if you have a query.

At MRS, we will spend today planning for your success.