The low-value pool and the $300 immediate write-off

An asset costing $300 or less, used mainly to earn rent rather than in a business, can be deducted in full in the year it is acquired. The test looks at sets and identical items together: four identical $100 ceiling fans bought together are $400, so they are not written off immediately, and the components of one system (a garage door's motor and its controls) count as one set.

A low-cost asset, one costing less than $1,000, can be allocated to a low-value pool, as can an asset whose diminishing value written-down value has fallen below $1,000. The pool deducts 18.75% of a low-cost asset's cost in the year it is added (whatever the days held), and 37.5% a year of the rest of its balance, which a low-value asset joins at its written-down value.

The pool speeds up deductions for cheaper items such as cooktops, rangehoods, microwaves and exhaust fans. Once an item is in the pool it stays there (section 40-430(2) of the Income Tax Assessment Act 1997), and once one low-cost asset has gone into it, every low-cost asset you start to hold in that income year or a later one must go in too, other than one written off at once (sections 40-430(1) and 40-425(4)). An item that cost $1,000 or more can join it later only if it is depreciated by diminishing value: an asset on prime cost never becomes a low-value asset (section 40-425(5)).

Both tests look at each asset, not the line it is printed on: a line of three $1,200 blinds is three assets, each tested on its own. An item that starts above the threshold is moved into the pool in the income year its written-down value first falls under $1,000, and our schedules show the move: the pool's column rises in that year as the plant's falls, and the workbook names the year beside the item.

A co-owner's interest in an asset is treated as the asset itself (s 40-35, ITAA 1997), so the $300 and $1,000 tests are met by each owner's share of a cost. Two equal owners each write off an item costing up to $600 and pool one costing less than $2,000; a report for a co-owned property works each owner's schedule on their share. See the guide to a co-owned rental's schedule.

A strata lot's share of the common plant is tested the same way, on the share's own cost: at 8 of 1,000 entitlements, the share of a lift costing about $44,502 installed is $356, so it can go to the low-value pool. The pages on a unit in Queensland and a unit in Tasmania price a walk-up lot's share of its block's laundry, intercom and pumps.