How Simplified Depreciation Pools can make calculating depreciation easier

Simplified depreciation pools allow small businesses to group assets costing $20,000 or more into a ‘general small business pool’. Instead of calculating individual depreciation rates, these assets are depreciated at 15% in the first year and 30% each year thereafter. 

Key Aspects of the Simplified Pool:

• Asset Threshold: Assets costing $20,000 or more (business portion) must be added to the pool.

• Depreciation Rate: In the year of purchase, you deduct 15% of the cost, regardless of when it was bought.

• Ongoing Rate: In subsequent years, you deduct 30% of the declining balance.

• Pool Write-Off: If the total pool balance is less than $20,000 at the end of the year (before calculating depreciation), it can be written off completely.

• Immediate Deductions: Assets costing less than $20,000 can be instantly written off, rather than added to this pool. 

This method simplifies bookkeeping for small businesses by reducing the need to track separate depreciation schedules for multiple assets. 

If you have any questions, or would like more information please reach out to me paul@congdonfuzi.com.au