General depreciation rules

To calculate your depreciation deduction for most assets you apply the general depreciation rules (unless you're eligible to use instant asset write-off or simplified depreciation for small business). You can generally use either the prime cost method or the diminishing value method to determine the asset's effective life.

Instant asset write-off

Eligible businesses can:

  • Immediately write off the cost of each asset that costs less than the threshold.

  • Claim a tax deduction for the business portion of the purchase cost in the year the asset is first used or installed ready for use.

Instant asset write-off can be used for both new and second-hand assets. Some exclusions and limits apply.

Simplified depreciation

Simplified depreciation rules for small businesses include:

  • An instant asset write-off for assets that cost less than the relevant threshold.

  • A general small business pool for assets that cost the same or more than the relevant threshold, which has simplified calculations to work out the depreciation deduction.


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