The ATO gives you two ways to wear down an asset’s value: Prime Cost (straight-line) and Diminishing Value (accelerated).
Prime Cost spreads the cost evenly over the asset’s effective life; Diminishing Value front-loads the deductions, because new things lose their shine—and value—faster.
You pick an effective life (ATO’s list or self-assessed), choose a method per asset, and generally stick with it; switching mid-stream is about as welcome as a handbrake turn in a school zone.
Cars also cop a government-imposed depreciation cap, so you can’t claim beyond the luxury car limit, no matter how heroic the badge.
Small businesses may have access to immediate write-off concessions or pooling rules—check the current ATO settings before getting the calculator sweaty.
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