The small business instant asset write-off threshold has been increased from $1,000 to $6,500 for the 2012-13 income year. As a result, small businesses can claim an accelerated initial deduction for motor vehicles acquired in 2012-13 and in subsequent years.

This means the long life small business pool and the general small business pool have been consolidated into a single pool to be written off at one rate.

These amendments only apply to small businesses that have an aggregated turnover of less than $2 million. The aggregated turnover includes the annual turnover of the small business and the annual turnovers of any connected or affiliated businesses.

The depreciating asset can be written off at the end of the income year when the business either:

  • starts to use it for a taxable purpose; or
  • has it installed ready for use for a taxable purpose.

An accelerated deduction can also be claimed for motor vehicles costing $6,500 or more under the same provisions. The cost of the motor vehicle is added to the general pool but unlike other assets, the deduction is $5,000 plus 15% of the remaining amount.

For example if you purchase a vehicle only used for business purposes for $12,000 in the 2012-13 income year you can claim the following:

$5000 + 15% (12,000 – 5,000) = $6,050

If the motor vehicle costs less than $6,500 it can be immediately written off.