Private ruling: Small business pool
Date of advice: 2 December 2019
Published: February 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can the value of the asset be reduced for its decline in value until you start using it in your business, then added to a general small business pool and written off at the end of the financial year if the pool balance is less than $30,000? | A1: Yes. As a small business entity you can choose to use a general small business pool to deduct amounts for your depreciating assets (section 328-185 of the Income Tax Assessment Act 1997 (ITAA 1997). You allocate the taxable purpose proportion of the adjustable value of the depreciating asset to the pool. The adjustable value of the depreciating asset at the time it is included in the pool is its cost less its decline in value up to that time. Where the pool balance is less than $30,000 at the end of the 20XX-XX income year, a deduction can be claimed for the balance, that is, it can be written off (section 328-210 of the ITAA 1997).

Relevant facts and circumstances: You purchased an asset in 20XX for less than $20,000. Since then you still worked as a full time employee up until the start of the 20XX-XX financial year when you commenced your business. After that you used the asset solely for your business. You are a small business entity.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 328-185 | Income Tax Assessment Act 1997 Section 328-210 | Income Tax Assessment Act 1997 Section 40-85