Register card 03The pool, worked through
The small business pool, worked through
The small business pool holds the depreciating assets a business using the simplified depreciation rules cannot write off straight away, and each income year it runs in the same order: the opening balance, plus new assets and cost additions, less what was received for assets that left, then either a low balance written off or the year’s deduction taken. For income years ending after 1 July 2023, the ATO gives the pool’s rates as 15% for assets added this year, whenever in the year they were bought, and 30% for each year after the first.
This is general information, not tax advice. The ATO says its instant asset write-off limits have changed over recent years and asks businesses to check the eligibility criteria, so check its pages for the income year you are working on before relying on a figure here.
The way inWhich assets go into the pool
The pool takes what the instant asset write-off does not: from 1 July 2023 the ATO gives the write-off limit as $20,000, and an asset costing the same as or more than the limit goes into the pool. Who can use the write-off, and for which dates, is set out on the ATO’s instant asset write-off page.
Assets the business held before it started using the simplified rules go in too, other than excluded assets, while assets that were written off straight away never form part of the pool.
The law behind the figure moved in 2026. The Treasury Laws Amendment (Tax Reform No. 2) Act 2026 changed the base threshold written into section 328-180 of the Income Tax Assessment Act 1997, and other thresholds in the small business depreciation rules, from $1,000 to $20,000. The Act calls the earlier higher limits “(temporary) increases” to the $1,000 figure. For section 328-180(1)(b), the change applies to an asset first used, or first installed ready for use, for a taxable purpose from 1 July 2026.
The yearThe pool, step by step
- Opening balance. For a business already on the simplified rules, it is last year’s closing balance. In the first year on the rules, each asset already held goes in at its adjustable value × the share used to earn assessable income. The opening balance is also adjusted where business use of a pooled asset has changed. Business use, and the clock on each asset record sets out that adjustment.
- New assets. Add the business portion of the adjustable value of assets acquired and first used this year, new or second-hand, at a cost at or above the write-off limit.
- Cost additions. An improvement to a pooled asset is added to the pool, limited to the business share of the original asset; so is the cost of disposing of an asset or permanently ceasing to use it. The ATO’s examples of disposal costs are advertising, commission and demolition. An improvement made in the same year the asset was acquired simply becomes part of its original cost.
- Disposals. For an asset sold or no longer used this year, reduce the pool by its termination value × its taxable use share, or by the whole termination value if it was used only for business. The termination value can be sale money, a trade-in, or an insurance payout for a loss.
- The low balance test. If the balance after those adjustments, and before any deduction, is less than the write-off limit, the whole balance is written off that year. For income years ending after 7:30 pm AEDT on 6 October 2020 and up to 30 June 2023, there was no limit: the whole balance was deducted. If the balance is negative, that amount is included in assessable income and the pool closes at zero.
- The deduction. Otherwise the opening balance × 30%, plus 15% of the business portion of each asset added this year, plus 15% of this year’s cost additions to assets pooled in an earlier year.
A full yearThe ATO’s closing balance worksheet
The ATO’s worksheet example, for a business owner it calls Fiona, shows every line at work.
| Line | Amount | Working |
|---|---|---|
| A. Opening pool balance | $30,200 | Last year’s close |
| B. Plus new pooled assets | $29,930 | Business portion only |
| C. Plus cost additions | $350 | Cost additions this year |
| D. Less disposals | $8,000 | Taxable share of what was received |
| E. Subtotal | $52,480 | A + B + C − D |
| F. Less deduction on the opening balance | $9,060 | 30% of $30,200 |
| G. Less deduction on new assets | $4,490 | 15% of $29,930, rounded |
| H. Less deduction on cost additions | $53 | 15% of $350, rounded |
| Closing pool balance | $38,877 | E − F − G − H |
Her $38,877 becomes next year’s opening balance.
The low balanceWhen the pool empties itself
The 2026 Act carries its own example of the low balance test.
Cassidy’s Gardens, a small business entity using the simplified rules, opens the year with a pool balance of $28,500. It buys a new ride-on mower for $21,000 at 80% business use, which adds $21,000 × 80% = $16,800, and sells its business car, used wholly for the business, for $29,600. The test is $28,500 + $16,800 − $29,600 = $15,700. Because that is less than $20,000, the business deducts $15,700 for the year and the pool closes at zero.
The pool also outlives a change of mind. A business that stops using the simplified rules keeps claiming 30% a year on assets already pooled until the balance falls below the write-off limit, then deducts what is left. A business that comes back to the rules adjusts its opening balance for assets it started using in the meantime.
On the cardWhat the pool asks of a register
A pooled asset still needs its own card, because the pool reaches back to it when its use changes and when it leaves. When an asset leaves the business follows a pooled asset out. Read against a register, the steps above suggest these fields; they are this guide’s reading, not the ATO’s words.
- How the opening pool balance was worked out, which the ATO says is kept for 5 years.
- For each asset added, its full cost beside the business portion that went into the pool.
- For each asset that left, what was received, the business share, and the income year.
- Each year’s worksheet lines, A to H, so one year’s close can be checked against the next year’s opening.