ATO Depreciation Rates List (Australia)

Introduction to ATO Effective Life Determinations

The Australian Taxation Office (ATO) publishes effective life determinations for thousands of depreciating assets. These determinations, consolidated in Taxation Ruling TR 2024/4, specify how many years an asset is expected to be used before it is fully depreciated. Every business that owns depreciating assets must either adopt the Commissioner's effective life or self-assess a reasonable alternative.

Effective life is the cornerstone of the Australian depreciation system. It drives the annual deduction a taxpayer can claim under Division 40 of the Income Tax Assessment Act 1997. Choosing the right effective life and depreciation method can have a significant impact on cash flow and taxable income.

Depreciation Methods

Australian taxpayers can choose between two statutory methods when depreciating assets. Once a method is chosen for a particular asset, it cannot be changed.

Diminishing Value Method (200%)

The diminishing value method applies a fixed percentage rate to the asset's remaining adjustable value (book value) each year. The formula is:

Deduction = Base Value × (Days held ÷ 365) × (200% ÷ Effective Life)

This method front-loads deductions, giving you larger write-offs in the early years of the asset's life. It is the most popular choice for businesses that want to maximise near-term cash flow.

Prime Cost (Straight-Line) Method

The prime cost method spreads the cost of the asset evenly over its effective life. The formula is:

Deduction = Cost × (Days held ÷ 365) × (100% ÷ Effective Life)

This method delivers equal annual deductions and is often preferred when consistent, predictable expenses are desired for financial planning.

Quick Comparison

Commissioner's Determination vs Self-Assessment

The Commissioner publishes a standard effective life for each class of asset. Taxpayers may either:

• Adopt the Commissioner's determination — the simplest approach with no additional evidence required.
• Self-assess an effective life — appropriate when the asset is used in unusual conditions, maintained differently from industry norms, or subject to accelerated wear and tear. The taxpayer must keep records demonstrating that the self-assessed life is reasonable.

Self-assessment can result in a shorter or longer effective life than the Commissioner's determination. For example, a laptop used continuously in a dusty construction environment may have a shorter effective life than the standard four years.

$20,000 Instant Asset Write-Off

Small businesses with an aggregated annual turnover of less than $10 million can immediately deduct the full cost of eligible depreciating assets that cost less than $20,000 each. This measure has been extended through 30 June 2026.

Key rules:

• The asset must be first used, or installed ready for use, within the income year.
• The $20,000 threshold is applied on a per-asset basis, so you can write off multiple assets in the same year.
• Assets costing $20,000 or more are placed in the small business simplified depreciation pool and depreciated at 15% in the first year and 30% each year thereafter.

Car Cost Limit (2024-25)

For the 2024-25 income year, the car cost limit is $69,674. This cap applies to passenger vehicles designed to carry fewer than nine passengers (including the driver) and a payload of less than one tonne.

If you purchase a car for $85,000, you can only depreciate $69,674 of that cost. The remaining $15,326 is not deductible. This limit is indexed annually in line with the motor vehicle purchase sub-group of the Consumer Price Index.

Depreciation Rate Tables by Asset Category

The tables below show common assets and their ATO-determined effective lives. The diminishing value (DV) rate and prime cost (PC) rate are derived from the effective life using the formulas above.

Office Equipment

Motor Vehicles

Building & Construction

Manufacturing

IT & Telecommunications

Medical Equipment

Agriculture