Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Act 2012 (23 of 2012)

Schedule 2   Increase to the small business instant asset write-off threshold

Part 1   Amendments contingent on the Minerals Resource Rent Tax

Income Tax Assessment Act 1997

39   Subsection 328-205(4) (example)

Repeal the example, substitute:

Example: When Bria's computer was allocated to her general small business pool for the 2012-13 income year, she estimated that it would be used 50% for her florist business. Due to increasing business, Bria estimates the computer's use to be 70% for the 2013-14 year, and 90% for the 2014-15 year. She makes an adjustment under section 328-225 for both those years.

Bria sells the computer for $1,000 at the start of the 2016-17 income year. She must now average the business use estimates for the computer for the year it was allocated to the pool and the next 3 years to work out the taxable purpose proportion of its termination value. The average is worked out as follows:

· 50% (original estimate); plus

· 70% (2013-14 estimate); plus

· 90% (2014-15 estimate); plus

· 90% (no change on previous year);

=300% / 4 = 75%

The taxable purpose proportion of the computer's termination value is, therefore:

75% of $1,000 = $750