Measures to Improve Cash-Flow for Small Business Taxpayers

Timed to coincide with the introduction of the carbon tax, the following new measures will improve cash-flow for small business:

1. Increased Instant Asset Write-Off Threshold

From 1 July 2012, small businesses will be able to write-off depreciating assets costing less than $6,500 (up from $1,000) in the income year in which they start to use the asset or have it installed ready for use. Therefore, where possible, you may wish to delay purchases of assets costing between $1,000 & $6,500 until after 30 June. 

2. Streamlined Pooling Provisions

From 1 July, the small business long life pool will cease to exist. From this date, all assets other than buildings will be depreciated in a general small business pool at 30% (with the rate of 15% applying in the first year). The closing balance of your long life pool & general small business pool at 30 June 2012 is to be added together in order to calculate the opening balance of the general small business pool for the beginning of the 2012/2013 income year. 

3. Special Rules for Cars

From 1 July 2012, small businesses can write-off $5,000 of a car costing $6,500 or more in the income year in which they start to use the car (new or second-hand). The remaining value is depreciated through the general pool at a rate of 15% in the first year & 30% in later years. Delaying the purchase of a business-related car until after 30 June can therefore have significant cash-flow benefits.