🇦🇺 Australian Finance

Asset Depreciation Calculator

Calculate asset depreciation using ATO Prime Cost or Diminishing Value methods — with instant asset write-off check. FY2025-26 rules.

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Depreciation Calculator

Enter your asset details to calculate annual depreciation, full schedule, and instant write-off eligibility.

Please enter the asset cost.
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ATO Asset Depreciation Calculator — FY2025-26

This free depreciation calculator computes asset depreciation under the two ATO-approved methods — Prime Cost (straight line) and Diminishing Value — for the 2025-26 financial year. It also checks whether your asset qualifies for the instant asset write-off (assets under $20,000 for small businesses with turnover under $10 million), calculates your first-year pro-rata deduction based on the actual purchase date, and generates a full depreciation schedule.

All figures are based on the ATO Guide to Depreciating Assets 2026 and the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 (LI 2025/20).

Key ATO Depreciation Figures — FY2025-26

ItemFigureSource / Effective Date
Instant asset write-off threshold (small business)$20,000ATO, FY2025-26 (made permanent from 1 July 2026)
Small business turnover thresholdUnder $10 millionATO, FY2025-26
Car cost limit$69,674ATO, FY2025-26
Computers / laptops effective life4 yearsATO TR 2023/1
Motor vehicles effective life8 yearsATO TR 2023/1
Office furniture effective life10 yearsATO TR 2023/1
Tools and equipment effective life5 yearsATO TR 2023/1

Prime Cost vs Diminishing Value — What's the Difference?

The ATO allows two methods for depreciating business assets. The method you choose affects when deductions are taken, not the total amount claimed over the asset's life.

Prime Cost: Annual deduction = Cost × (Days held ÷ 365) × (100% ÷ Effective life)
Diminishing Value: Annual deduction = Opening value × (Days held ÷ 365) × (200% ÷ Effective life)
  • Prime Cost produces equal deductions each year — simple and predictable.
  • Diminishing Value produces larger deductions in early years, reducing over time. Useful if you want to front-load your tax deductions.
  • For assets acquired after 10 May 2006, the Diminishing Value rate is 200% ÷ effective life.

Worked Example — $15,000 Laptop (Prime Cost)

A small business purchases a laptop for $15,000 on 1 January 2026 (effective life: 4 years). The asset is used 100% for business. It was acquired after 10 May 2006.

  • Prime Cost rate: 100% ÷ 4 years = 25% per year
  • Days held in FY2025-26: 181 days (1 Jan to 30 Jun)
  • Year 1 deduction: $15,000 × (181 ÷ 365) × 25% = $1,867
  • Years 2-4: $15,000 × 25% = $3,750 per year
  • Since cost is under $20,000 and turnover is under $10M, the business could alternatively claim the full $15,000 as an instant write-off in Year 1.
💡 Instant asset write-off was made permanent from 1 July 2026 for small businesses (under $10M turnover) for assets under $20,000. Assets must be first used or installed ready for use by 30 June 2026 to qualify under FY2025-26 rules. Confirm eligibility with your accountant or the ATO.

Which Assets Can Be Depreciated?

  • Plant and equipment: Computers, machinery, vehicles, tools, appliances — any asset with a limited effective life used in producing assessable income.
  • Investment properties — plant and equipment: Items such as carpets, blinds, hot water systems, and air conditioning units (for properties where a contract was exchanged before 9 May 2017 for existing properties purchased by investors).
  • Capital works: The building structure itself depreciates at 2.5% per year over 40 years under Division 43 — separate from plant and equipment.
  • Motor vehicles: Capped at the car cost limit ($69,674 for FY2025-26) regardless of purchase price.

Frequently Asked Questions

What is the instant asset write-off threshold for FY2025-26?
For FY2025-26, small businesses with aggregated turnover under $10 million can immediately deduct the full cost of eligible assets costing less than $20,000. The asset must be first used or installed ready for use by 30 June 2026. Assets above $20,000 use standard Prime Cost or Diminishing Value depreciation. The $20,000 threshold was made permanent from 1 July 2026 via the 2026 Federal Budget.
What is the difference between Prime Cost and Diminishing Value depreciation?
Prime Cost (straight line) depreciates the asset at a constant percentage of the original cost each year, producing equal annual deductions. Diminishing Value applies a higher percentage (200% ÷ effective life) to the remaining undeducted balance, generating larger deductions in early years that reduce over time. The choice affects when deductions are taken but not the total amount ultimately claimed over the asset's full effective life.
How is the first-year depreciation calculated?
The ATO requires first-year depreciation to be pro-rated based on the number of days the asset was held in that financial year. An asset purchased on 1 January 2026 is held for 181 days in FY2025-26, so the first-year deduction is multiplied by 181/365. This calculator applies the correct pro-rata automatically based on your purchase date.
What is the car cost limit for depreciation?
The car cost limit for FY2025-26 is $69,674. If the first element of cost of a car exceeds this limit, the cost is reduced to $69,674 for depreciation purposes, regardless of the actual purchase price. This limit applies to passenger vehicles designed to carry fewer than 9 passengers.
How do I find the effective life of my asset?
The ATO publishes effective life determinations in the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 (LI 2025/20). Common examples include: computers and laptops (4 years), motor vehicles (8 years), office furniture (10 years), tools and equipment (5 years), and general plant and machinery (10 years). You can also make your own estimate of effective life based on the specific asset's expected useful life in your business.
Can I claim depreciation on a home office asset?
Yes — if an asset (such as a laptop or desk) is used for work purposes, you can claim depreciation on the business-use percentage. Enter your business use percentage in the calculator to see the adjusted deduction. For example, a laptop used 60% for work can only be depreciated at 60% of its cost.
Is this depreciation calculator free?
Yes — completely free with no registration required. All calculations happen instantly in your browser. This calculator is for estimation purposes only. Confirm deductions with your accountant or the ATO before lodging.
Is my data private?
Yes — all calculations happen in your browser. NerdyTools does not store, transmit, or log any figures you enter. Your financial data never leaves your device.
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