Using a Depreciation Calculator in Australia: A Step-by-Step Guide
Calculates depreciation using the ATO prime cost and diminishing value methods. This guide walks through what each input means, the formula behind the answer and a worked example using typical Australian figures. You can follow along in the free Depreciation Calculator.
Why it matters
Australian businesses deal with GST at 10%, BAS reporting, PAYG withholding for staff, super guarantee obligations and company or individual tax depending on structure. Getting pricing and margins right is the difference between busy and profitable.
What you need to enter
The calculator asks for 2 inputs. The table shows each one with the example value used later in this guide.
| Input | Example value |
|---|---|
| Asset cost ($) | 10000 |
| Effective life (years) | 5 |
The formula
Prime cost = cost ÷ effective life. Diminishing value = base value × 200% ÷ effective life.
Worked example
Entering the example values above gives these results:
| Result | Value |
|---|---|
| Diminishing value: year one deduction | $4,000.00 |
| Prime cost: yearly deduction | $2,000.00 |
| Diminishing value rate | 40% |
The headline figure is $4,000.00 (diminishing value: year one deduction). Change any input in the calculator and every result updates instantly, so you can test different scenarios side by side.
How the diminishing value: year one deduction changes with asset cost
The table below keeps every other input at the example value and moves only “Asset cost ($)” up and down by 10% and 20%. It shows how sensitive the diminishing value: year one deduction is to that one figure.
| Asset cost ($) | Diminishing value: year one deduction |
|---|---|
| 8,000 | $3,200.00 |
| 9,000 | $3,600.00 |
| 10,000 | $4,000.00 |
| 11,000 | $4,400.00 |
| 12,000 | $4,800.00 |
At 8,000 the result is $3,200.00; at 12,000 it is $4,800.00. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.
A practical tip
Check whether the instant asset write-off applies to your business before depreciating an asset over several years.
Keep going
Before relying on the number, read Common Depreciation Mistakes (and a Better Way). You might also find these guides useful:
- Cash Runway Calculator Explained for Australians
- How the Sole Trader Tax Calculator Works (With a Worked Example)
- Company Tax Calculator: Formula, Example and What the Result Means
Frequently asked questions
- When do I need to register for GST?
- When your annual GST turnover reaches $75,000, or $150,000 for non-profits. Taxi and ride-share drivers must register regardless of turnover.
- What company tax rate applies?
- 25% for base rate entities with turnover under $50 million, and 30% for other companies.
- Should I talk to an accountant?
- Yes, for structure, tax planning and compliance. These calculators give quick estimates only.
Run your own numbers in the Depreciation Calculator.
Open the calculatorGeneral information only. Rates and thresholds change, usually on 1 July. Confirm current figures with the ATO or the relevant authority, and get personal advice for decisions about your situation.