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  • General depreciation rules – capital allowances

    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).

    The general depreciation rules set the amounts (capital allowances) that can be claimed, based on the asset's effective life.

    To calculate depreciation, you can generally use either the prime cost method or the diminishing value method. In some cases, you must use the same method used by the former holder of the asset – for example, if you acquire the asset from an associate such as your spouse or business partner.

    For some intangible depreciating assets, including intellectual property, you can only use the prime cost method.

    Both methods require you to determine the asset's effective life.

    Different rules apply to:

    To calculate depreciation for most assets for a particular income year, you can use the Depreciation and capital allowances tool, which compares results of the two methods.

    Instant asset write-off

    Businesses with a turnover from $10 million to less than $50 million may also be eligible for the instant asset write-off. This applies to assets costing less than $30,000 each purchased and used or installed ready for use from 7.30pm (AEDT) 2 April 2019 to 30 June 2020.

    For assets purchased, costing $30,000 or more, the general depreciation rules must be used.

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    Last modified: 12 Apr 2019QC 45983