ATO Depreciation Calculator
Calculate Division 40 depreciation for Australian businesses — modelled on ATO tax ruling TR 2024/1
Asset Details
Depreciation Method
Value
Cost
Both
Instant Asset Write-Off may apply
Assets under $20,000 may qualify for an immediate full deduction in the year of purchase (FY2024–25, aggregated turnover < $10M). Confirm eligibility with your tax advisor.
Summary
Depreciation Curve — Book Value Over Time
Managing more than one asset?
AssetAccountant automates ATO-compliant depreciation across your entire register — no spreadsheets required.
Disclaimer: This calculator is provided for general information and demonstration purposes only. Results are estimates based on the inputs provided and the methodology modelled on ATO tax ruling TR 2024/1. AssetAccountant does not guarantee the accuracy, completeness or suitability of these results for any particular purpose. This calculator does not constitute tax advice and should not be relied upon as such. Tax laws and ATO rulings change — always verify calculations with a qualified tax professional or registered tax agent before making any financial or tax decisions.
How to Use This ATO Depreciation Calculator
To get started, enter your asset category, purchase date, and cost. This ATO depreciation calculator then instantly shows your Division 40 deductions under both the Diminishing Value (DV) and Prime Cost (PC) methods, side by side.
In addition, Year 1 is automatically pro-rated based on the number of days you held the asset in the income year. Use the Override button to enter a self-assessed effective life instead of the ATO Commissioner’s published rate. For motor vehicles, also tick the luxury vehicle cap checkbox to apply the ATO car limit for the relevant financial year.
What Is Division 40 Depreciation?
Simply put, Division 40 of the Income Tax Assessment Act 1997 (ITAA 1997) is the ATO’s framework for depreciating business assets. For example, it covers everything from laptops and vehicles to industrial machinery and agricultural equipment. Under Div 40, you deduct the cost of an asset over its effective life — not all at once in the year of purchase — unless an instant asset write-off applies.
The ATO Commissioner publishes standard effective lives for common asset types in Tax Ruling TR 2024/1. However, you may also self-assess a different life if you have reasonable grounds. As a result, this ATO depreciation calculator uses the Commissioner’s rates as defaults, and you can override them at any time.
one asset?
Diminishing Value vs Prime Cost — Which Method Is Better?
Both methods produce the same total deduction over the life of the asset. However, they differ significantly in timing.
Diminishing Value (DV) applies a rate to the asset’s reducing written-down value each year. As a result, deductions are higher in early years and taper off over time — which accelerates your tax benefit.
Similarly, Prime Cost (PC) applies a fixed rate to the original cost every year. Consequently, deductions stay equal throughout the asset’s life — predictable and straightforward.
For most businesses, Diminishing Value delivers more cash flow benefit early on. On the other hand, if you expect higher taxable income in later years, Prime Cost may suit you better. Always discuss the choice with your registered tax agent, because once you choose a method for an asset you generally cannot change it.
How Does the Instant Asset Write-Off Work?
Depending on when you purchased your asset and the size of your business, you may be able to deduct the full cost immediately. In other words, instead of spreading deductions over several years, you write off the entire amount in the year of purchase. Furthermore, this online depreciation calculator flags instant write-off eligibility automatically based on your purchase date.
However, eligibility thresholds, turnover limits, and the availability of instant write-off schemes have changed a number of times over recent years. Therefore, always confirm whether your asset qualifies with your registered tax advisor or by checking the ATO website directly.
ATO Car Limit — Luxury Vehicle Cap
For certain passenger and light commercial vehicles, the ATO sets an annual cap on the depreciable cost. If your vehicle cost more than this limit, you can only claim depreciation on the capped portion — the amount above the limit is not deductible.
Additionally, the ATO updates the car limit each financial year. Similarly, the rules around which vehicles qualify can change. Therefore, always verify the current limit on the ATO website before lodging your return. Select “Apply ATO car limit” in this Australian tax depreciation calculator to see how the cap affects your deductions.
Disclaimer: This calculator is provided for general information purposes only and does not constitute tax advice. Results are estimates based on the inputs provided and the methodology modelled on ATO Tax Ruling TR 2024/1. Tax laws and ATO rulings change — always verify your depreciation calculations with a qualified tax professional or registered tax agent before making financial or tax decisions.
