Treatment by Standard Ledger
We will record any asset purchases within the Xero Asset Register so that it is available for review / depreciation as part of end of year accounts / tax processing.
This includes asset purchases subject to the instant asset write-off (in Australia)– they will be regarded as 100% deductible, but it’s good practice to have a complete asset register.
For those that want to get technical ...
Depreciation
Under the ATO simpler depreciation rules for small businesses (turnover less than $2 million) guidelines, you can choose one of two methods:
- Use an asset pool approach where:Any asset < $1,000 you can an immediate depreciation writeoff (effectively an expense);For assets > $1,000 you claim 15% deduction in Year 1, and then 30% per year from then on
- (For all assets > $300), apply a straight line depreciation method over its effective life. Other than for a few specifc exclusions, you have the choice of either working out the effective life yourself or using an effective life determined by the ATO – these are published each year, with the latest being TR 2014/4. Typical examples of assets for most startups include:
- Laptops 3 years
- Office Furniture / Equipment 5 years
Instant Asset Write-off
Originally introduced in the 2015 budget, and extended in each budget since, the federal government has encouraged small businesses to make greater investments into their own businesses through the instant asset write-off. See here for more information: https://support.standardledger.co/knowledge/what-is-the-instant-asset-write-off
ATO resources