Minor assets write off

Date
Issue

The instant asset write of rules are great for eligible businesses, but larger corporate entities are still having to capitalise and depreciate low value assets for tax that are often expensed for book purposes. At a minimum, it would be beneficial to simply allow an immediate tax write off for minor assets that are expensed for accounting purposes (ie, those that fall below the asset recognition threshold).

Current rules allow for the pooling of assets with a cost of less than $1,000, but fixed asset registers are often not able to simply apply the pooling mechanism. For assets with a cost over $1,000 but below an entities accounting write off threshold, having to separately capitalise and depreciate these assets for tax creates additional record keeping requirements and timing differences for very little gain to the revenue. If the low value pooling rules are applied correctly, these assets eventually need to be transferred to the pool, again increasing administrative compliance costs. It is pointless to be uploading a multitude of asset entries to a tax fixed asset register when these assets are written off for accounting - and then once these assets are depreciated to below the $1,000 threshold and qualify for pooling, they then need to be effectively individually removed from the tax asset register to form part of the pool balance. The low value pooling rules are not much of a concession when you consider the associated compliance costs. A minor asset write off aligned with accounting policies removes this compliance burden.