Get the guide to depreciating assets
The Guide to depreciating assets 2024 is available in print, to get a copy of the guide there are 2 ways
- you can download this guide in portable document format (PDF) select the Print or Download icon under the page heading then select PDF whole topic
- go to Guide to depreciating assets 2024This link opens in a new window on our Publications Ordering Service (POS) at iorder.com.au to have a copy sent to you in the post.
About depreciating assets
As a general rule, you can claim deductions for expenses you incurred in gaining or producing your income (for example, in carrying on a business) but some expenditure, such as the cost of acquiring capital assets, is generally not deductible. However, you may be able to claim a deduction for the decline in value of the cost of capital assets used in gaining assessable income.
Guide to depreciating assets 2024 explains:
- how to work out the decline in value of your depreciating assets
- what happens when you dispose of or stop using a depreciating asset, and
- the deductions you may be able to claim under uniform capital allowances (UCA) for capital expenditure other than on depreciating assets.
In this guide, the words ‘ignoring any GST impact’ mean that if you are not entitled to claim an input tax credit for GST for a depreciating asset that you hold, then the cost of the depreciating asset includes any GST.
Who should use this guide?
Use this guide if you bought capital assets to use in gaining or producing your assessable income and you would like to claim a deduction for the assets’ decline in value. Also use this guide if you incurred other capital expenditure and want to know whether you can claim a deduction for the expenditure.
What's new in the guide to depreciating assets
Find out what's new for in the guide to depreciating assets.
Small business energy incentive
The Small business energy incentive provides businesses with an aggregated annual turnover of less than $50 million with access to a bonus deduction equal to 20% of the cost of eligible assets and improvements to existing assets that support more efficient energy use.
This is a temporary measure to support small businesses to improve their energy efficiency and save on energy bills. The bonus deduction applies to the cost of eligible assets and improvements up to a maximum amount of $100,000 with the maximum bonus deduction being $20,000.
To claim the bonus deduction for the small business energy incentive, see the instructions for completing your entities tax return.
For more information, see Small business energy incentive.
Small business – instant asset write-off
The Small business support – instant asset write-off provides a temporary increase to the instant asset write-off threshold to support small business entities (with an aggregated annual turnover of less than $10 million).
Eligible small business entities can immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose between 1 July 2023 and 30 June 2024.
The $20,000 threshold applies on a per asset basis, so small business entities can instantly write off multiple assets. Small business entities can also immediately deduct an eligible amount included in the second element of a depreciating asset's cost.
The 5-year 'lock out' rule continues to be suspended until 30 June 2024. This rule prevented small business entities from re-entering the simplified depreciation regime if they opted out.
For more information, see Small business support – $20,000 instant asset write-off.
Effective life determinations
We're updating how we publish effective life determinations.
The decline in value of a depreciating asset is worked out on the basis of its effective life. You can either make your own estimate of its effective life or use the Commissioner's effective life determinations. For assistance with both, see Effective life of an asset.
Small business entities
Small business entities may choose to use simplified depreciation rules. For more information, see Small business entity concessions.
When we refer to publications and services or webpages in this guide, we will provide a link to where you access and read it online.
Unfamiliar terms
Unfamiliar terms are shown in bold when first used in this guide. For an explanation of these unfamiliar terms, see Definitions for UCA terms.
Continue to: Deductions for the cost of depreciating assets