TAX TIP – Temporary increase to ‘low cost’ and ‘low value’ thresholds
An immediate deduction is available under S.328-180, for an SBE’s depreciating asset whose cost is less than the low cost threshold. In respect of the 2019 and 2020 income years, this threshold has been temporarily increased from $1,000 to:
- $20,000 – If the asset was first acquired on or after 12 May 2015, and it was first used (or installed ready for use) for a taxable purpose before 29 January 2019;
- $25,000 – If the asset was first acquired on or after 12 May 2015, and it was first used (or installed ready for use) for a taxable purpose on or after 29 January 2019 but before 2 April 2019;
- $30,000 – If the asset was first acquired on or after 12 May 2015, and it was first used (or installed ready for use) for a taxable purpose on or after 2 April 2019 but before 1 July
The threshold for a low pool value balance to be deductible in full (which reduces the pool balance to nil) has also been temporarily increased for an SBE taxpayer with a 30 June year- end to $30,000 for the 2019 and 2020 income years (from $1,000 under S.328-210).
Note that these thresholds revert to $1,000 from 1 July 2020. Refer to S.328-180 of the
Income Tax (Transitional Provisions) Act 1997.