The new rules relating to simplified depreciation have been effective from 1 July 2012 and provide significant advantages to small business enterprise taxpayers who are defined as carrying on a business and have an annual net turnover of less than $2 million.

These rules do not apply to rental property assets, low value pool and software development assets, capital works (property) and horticultural plants.

The rules provide for an instant write-off, increasing the threshold from $1,000 to $6,500. It is available on an asset basis (not an aggregate of similar assets). In regard to motor vehicles, there is an instant deduction of up to $5,000. The vehicle does not need to be primarily used for business purposes and the definition for a motor vehicle is very broad and does apply to second-hand motor vehicles.