Depreciation Calculator Australia
Prime cost claims the same amount each year: cost × (days held ÷ 365) × (100% ÷ effective life). Diminishing value claims more up front: base value × (days held ÷ 365) × (200% ÷ effective life). Fin builds the year-by-year schedule, with a mid-year start and private use — or a straight-line schedule for your books.
Excluding GST you can claim
Years — find the ATO’s figure
Or installed ready for use
Optional
Deduction for 2026-27
$16,000
365 days held · 20% a year
Diminishing value would give $32,000 for 2026-27.
| Year | Decline | Deductible | Closing |
|---|---|---|---|
| 2026-27365 days | $16,000 | $16,000 | $64,000 |
| 2027-28366 days* | $16,044 | $16,044 | $47,956 |
| 2028-29365 days | $16,000 | $16,000 | $31,956 |
| 2029-30365 days | $16,000 | $16,000 | $15,956 |
| 2030-31365 days | $15,956 | $15,956 | $0 |
| Total | $80,000 | $80,000 |
Each year opens at the year before’s closing value; year one at the cost.
- * A leap year: 366 days held. The ATO formula still divides by 365, so that year claims a little more.
- Small business? You may be able to deduct the whole cost at once under the instant asset write-off — check the current threshold with the ATO.
Worked to the cent, shown to the dollar. Indicative only — general information, not tax advice.
Free to start. Connect a bank or drop in a statement.
How depreciation works in Australia
The ATO calls depreciation decline in value. You work it out per asset, per income year (1 July to 30 June), with one of two methods. Prime cost claims a fixed share of the cost every year until it is written off. Diminishing value applies a rate twice as high to the value that is left, so the claim is bigger early and shrinks each year. Both count the days held: from the day you first use the asset, or install it ready for use, to 30 June.
The rate comes from the effective life: use the Commissioner’s figure for your asset or self-assess one. Examples below are for an $80,000 asset with a 5-year life, held all year.
| Method | Formula | $80,000, 5 years |
|---|---|---|
| Prime cost (straight line) | Cost × (days held ÷ 365) × (100% ÷ effective life) | $16,000 every year |
| Diminishing value | Base value × (days held ÷ 365) × (200% ÷ effective life) | $32,000 in year one, then less |
| Diminishing value, first held before 10 May 2006 | Base value × (days held ÷ 365) × (150% ÷ effective life) | $24,000 in year one |
| Straight line (accounting) | (Cost − residual value) ÷ useful life | $16,000 every year, no residual |
| Declining balance (accounting) | Opening book value × (multiplier ÷ useful life), never below the residual value | $32,000 in year one at 2× |
Grounded in ATO guidance — Prime cost (straight line) and diminishing value methods, last updated 28 August 2026. Checked . General information, not tax advice.
Worked example: the ATO’s $80,000 asset
The ATO’s own example is an asset that cost $80,000, was first used on the first day of the income year and has a 5-year effective life. Prime cost claims $16,000 each year. Diminishing value claims $32,000 in year one, then 40% of what is left: the base value for year two is $48,000.
| Year | Prime cost claim | Diminishing value base | Diminishing value claim |
|---|---|---|---|
| Year 1 | $16,000 | $80,000 | $32,000 |
| Year 2 | $16,000 | $48,000 | $19,200 |
| Year 3 | $16,000 | $28,800 | $11,520 |
| Year 4 | $16,000 | $17,280 | $6,912 |
| Year 5 | $16,000 | $10,368 | $4,147 |
Years 1 to 4 are the ATO’s published figures; year 5 follows the same formula. Like the ATO’s example, the table counts 365 days held every year. A real schedule counts 366 in a leap year, which the calculator does.
A mid-year start
The ATO’s second example is Paul’s $2,000 fridge, with a 10-year effective life, which he moved into his takeaway business on 1 March 2022. From 1 March to 30 June, counting both days, is 122 days, so his deduction for 2021–22 is $2,000 × (122 ÷ 365) × (100% ÷ 10) = $67. The fridge still declined $200 over the whole year — it had been in private use since 2020 — but only the business days are deductible. A new asset first used on 1 March declines the same $67 in its first year.
Private use: Decline and Deductible are separate
Use the same $80,000 asset 40% of the time for private purposes and the ATO reduces the deduction by 40%. Under diminishing value the asset still declines $32,000 in year one; you deduct $19,200, and year two opens at $48,000, the full closing value. Folding private use into the decline would understate every later year — the reason the asset register keeps the two columns apart.
Depreciation for your accounts, in any country
Switch the calculator to Accounting for book depreciation of the kind IAS 16 describes, in whole years and your own currency. Straight line spreads cost less residual value evenly over the useful life: $16,000 a year on the $80,000, 5-year asset. Declining balance takes a multiplier ÷ useful life of the opening book value — $32,000 in year one at the double-declining 2× — and never takes the book value below the residual value.
Tax rules differ by country, and this calculator does not model US MACRS, UK capital allowances or any other tax regime outside Australia. Inside the app, the 2Fin asset register follows the tax authority’s own rules in Australia, the United Kingdom, the United States, Canada, India, New Zealand, Singapore and South Africa, and prime cost or diminishing value over a life you enter elsewhere.
Depreciation — common questions
How do you calculate depreciation for tax in Australia?
The ATO calls it decline in value and gives two methods. Prime cost: cost × (days held ÷ 365) × (100% ÷ effective life), the same amount each year. Diminishing value: base value × (days held ÷ 365) × (200% ÷ effective life), where the base value is what is left after earlier years — so more is claimed early. On the ATO’s example of an $80,000 asset with a 5-year effective life, held all year, that is $16,000 a year under prime cost, or $32,000 in year one under diminishing value.
How are days held counted when I start using an asset part way through the year?
From the day you first use the asset, or install it ready for use, to 30 June, counting both days. The ATO’s own example counts 122 days from 1 March to 30 June 2022, so a $2,000 asset with a 10-year effective life gives $2,000 × (122 ÷ 365) × 10% = $67 for that income year. Under prime cost, the part of a year you missed at the start is claimed in an extra year at the end.
Does a leap year change the depreciation claim?
Slightly. The ATO counts the days you actually held the asset, and the income year that includes 29 February has 366 of them, but the formula still divides by 365. A whole leap year therefore claims 366/365 of a normal year, and under prime cost the asset is written off a little sooner. The calculator marks those years.
Does private use reduce depreciation?
It reduces the deduction, not the decline in value. The ATO’s rule: if an asset is used 40% of the time for private purposes, the deduction for its decline in value is reduced by 40%. On the $80,000 example, a $32,000 first-year decline gives a $19,200 deduction, and the value carried into the next year still falls by the full $32,000, to $48,000. That is why Fin shows Decline and Deductible as separate columns.
When does the 150% diminishing value rate apply?
When you started to hold the asset before 10 May 2006. The formula becomes base value × (days held ÷ 365) × (150% ÷ effective life): $24,000 in year one on the $80,000, 5-year example instead of $32,000. Tick the box in the calculator, or enter a first-use date before 10 May 2006 and Fin applies it for you.
Can I deduct the whole cost of an asset at once instead?
A small business may be able to, in the year the asset is first used, under the instant asset write-off. The threshold and who qualifies are set by the government and change, so check the current figure with the ATO before relying on it. An asset that does not qualify is depreciated over its effective life, as this calculator shows.
Can I use this calculator outside Australia?
Yes, for your accounts. Switch to Accounting for straight-line or declining-balance depreciation in any currency, in whole years. That is book depreciation, not a country’s tax rules: it does not model US MACRS, UK capital allowances or any other tax regime. Inside the 2Fin app, the asset register follows the tax authority’s own depreciation rules in Australia, the United Kingdom, the United States, Canada, India, New Zealand, Singapore and South Africa.
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Every asset on the register, every year
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Get 2Fin freeMore for you: Asset register·Effective life·Instant asset write-off
Terms used on this page
Full glossary →- Depreciation (decline in value)Claiming the cost of a big asset gradually over its life.
- Effective lifeHow many years an asset is expected to be used — the base of every depreciation rate.
- Prime cost methodStraight-line depreciation — the same deduction each year of the effective life.
- Diminishing value methodFront-loaded depreciation — a bigger claim early, shrinking each year.
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