Pooling is a method of depreciating eligible assets at a higher rate to maximise depreciation deductions. There are two different ways that an asset can qualify for a pool:
- Low-cost assets - A low-cost asset is a depreciable asset that has an opening value of less than $1,000 in the year of acquisition.
- Low-value assets - A low-value asset is a depreciable asset that has a written down value of less than $1,000. That is, if the opening value of an asset is greater than $1,000 in the year of acquisition but the value remaining after depreciating over time (opening value less depreciation in year one less depreciation in year two etc) is now less than $1,000. Assets meeting this classification are placed in the pool.
Pooling is used in conjunction with the diminishing value method to maximise deductions in the first five years of the depreciation schedule.
- Q1 What is capital works deduction (Division 43)?
- Q2 What is plant and equipment (Division 40)?
- Q3 How is the capital works deduction different to plant and equipment?
- Q4 Why itemise plant and equipment?
- Q5 Difference between Prime Cost and Diminishing Value methods of depreciation?
- Q6 Which depreciation method is best?
- Q7 What is scrapping?
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