Accelerated Depreciation For Small Business Primary Producers

From 7.30pm, 12 May, 2015 primary producers who meet the definition of a small business with an aggregated annual turnover of less than $2 million can claim an immediate deduction for capital expenditure on water facilities including dams, tanks, bores, irrigation channels, pumps, water towers and windmills; and fencing assets.

Primary producers can also claim fodder storage assets such as silos and tanks used to store grain and other animal feed assets over 3 income years.

This is in addition to an immediate deduction for assets that cost less than $20,000 (increased from $1,000) that are acquired and installed ready for use up to, and including, 30 June 2017. These accelerated depreciation rules apply to both new and second hand assets.

The assets acquired for $20,000 or more must be pooled and depreciated at 15% in the first year and 30% each year thereafter.

The balance of the general small business pool can be written off if it is less than $20,000 at year end between 30 June 2015 and 30 June 2017 – before applying the depreciation deduction for that year.

Excluded assets are horticultural plants including grapevines, in-house software allocated to a software development pool and capital works.

The Government recently announced in the Federal Budget at 7.30pm on 3 May, 2016 (Australian Capital Territory time) that they expect to increase the aggregated annual turnover from $2 million to $10 million from 1 July, 2016 (must be legislated to become tax law before the changes are to take affect).

The increased turnover threshold will not however, apply to the existing small business capital gains tax concessions with the annual turnover remaining at $2 million.

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