Subdivision 328-D
(i.e., the accelerated depreciation rules for SBE taxpayers)
An SBE taxpayer may choose to calculate depreciation under the accelerated depreciation rules (in Subdivision 328-D) instead of the uniform capital allowance rules (in Division 40). Broadly speaking, a taxpayer is an SBE under S.328-110 where:
- the taxpayer carries on a business; and
- the aggregated turnover of the taxpayer and of particular related entities (being ‘connected entities’ and ‘affiliates’ of the taxpayer as defined in S.328-125 and S.328-130) is less than $10 million.
Where a choice is made to use the accelerated depreciation rules (in Subdivision 328-D), depreciating assets are allocated to a general small business pool. These assets are effectively treated as a single depreciating asset and depreciated on a diminishing value basis (generally, at a rate of 30%, with a rate of 15% in the year newly acquired assets are allocated to the pool).
Low cost assets are immediately deductible and are not allocated to a general small business pool. An immediate deduction is also available for a pool balance that falls below the low pool value, reducing the pool balance to nil. Refer to S.328-180, S.328-210 and the TAX TIP below.
Importantly, certain depreciating assets cannot access the accelerated depreciation rules in Subdivision 328-D. These assets are listed in S.328-175, and include assets leased to another entity under a depreciating asset lease (i.e., where a right to use an asset is granted to another entity other than under a hire purchase agreement or short-term hire agreement). Refer to S.328-175(6).
It should also be noted that modifications to these rules may apply where depreciating assets are not acquired or used solely for a taxable purpose (i.e., either in the taxpayer’s business, or in gaining their assessable income).