Australian ATO Depreciation Guide

If you own income-producing assets in Australia (for business or rental property), you can claim a tax deduction for their decline in value.

1. The Two Main Methods

You can choose between two methods for most assets. Once chosen for an asset, you cannot change it.

Assumes value decreases uniformly over its effective life.

Best for: Assets that hold value or provide steady returns.

Cost × (100% / Effective Life)

Assumes value decreases faster in early years.

Best for: Tech, Cars, Maximizing cash flow early.

Base Value × (200% / Effective Life)

To calculate depreciation, you need the asset's "Effective Life". You can use the ATO's determination or self-assess.

Eligible small businesses can instantly deduct the full cost of assets costing less than the threshold.

Current Status:

Applies to small businesses with aggregated turnover under $10 million.

Note: Thresholds are subject to annual budget announcements. Check ATO website for latest updates.

Assets costing more than the instant write-off threshold can be placed in a "Small Business Pool".

Last updated: January 2026. Australian tax laws change with federal budgets - consult a registered tax agent.