Depreciation Schedule Calculator

The two methods, and the rate behind each

Prime cost writes off 100% of the effective life each year: an asset with a five-year effective life is deducted at 20% of its cost, every year, until it is exhausted. The deduction does not change as the asset ages.

Diminishing value writes off 200% of the effective life, applied to the declining balance rather than to the original cost. The same five-year asset is deducted at 40% of its opening value each year, so the dollar deduction falls as the balance falls. The 200% figure applies to assets held on or after 10 May 2006; assets held before that date use 150%.

Because the rate is derived from the effective life, getting the life wrong scales every year of the schedule. A five-year life instead of seven moves 40% of the cost into the first year instead of roughly 29%.

Which method to use

Diminishing value gives the larger deduction earlier, which is worth more if the practice is profitable now and expects to be in a lower tax position later. Prime cost gives a smaller, predictable deduction each year.

You choose the method per asset, and the choice is not permanent: you can switch from diminishing value to prime cost in a later year, but not back. Switching is worth checking rather than assuming, because once the declining balance is low the two methods converge anyway.

Effective life: the ATO ruling or your own

The ATO publishes effective life rulings by asset class. Medical and dental equipment commonly sits between five and fifteen years depending on the item. You can adopt the ATO figure or self-assess a different one.

Self-assessing a shorter life brings the deduction forward, and it is the choice most likely to be questioned. It requires a written explanation of why the asset will not last as long as the ruling assumes, and it should be made when the asset is first used rather than reconstructed later.

Worked example: a dental chair over ten years

Take a dental chair and delivery unit bought for $32,000, with a ten-year effective life adopted from the ATO's medical and dental equipment ruling. On the diminishing value method the rate is 20% (200% of the ten-year life), so the deduction is $6,400 in the first full year, then 20% of what remains: $5,120 in year two on the $25,600 balance, and so on as the balance runs down.

The same chair on prime cost is a flat $3,200 a year for all ten years, the cost divided evenly by the effective life. Diminishing value pulls more of the deduction into the first two or three years; prime cost spreads it evenly and is easier to forecast. Neither method changes the total deducted over the asset's life, only when it lands.

Business use apportionment

You can only claim depreciation on the business-use portion of the asset. A vehicle used 70% for practice visits is deducted at 70% of what the schedule produces.

The same logbook that supports a fuel or running-cost claim supports the depreciation percentage. An asset that starts as 100% business use and later becomes partly private needs the percentage revisited, not left at its original figure.

What this calculator does not model

Assets costing under $1,000 may qualify for the low-value pool instead of being depreciated individually, which has its own rates and its own timing. This calculator schedules an asset on its own, so a pooled asset will not match the output here.

It also does not apply the instant asset write-off, which is a separate concession with its own threshold and turnover test. If the asset is eligible for an immediate deduction, the write-off calculator answers that question rather than this one.

Records the ATO expects

Keep the purchase invoice, the date the asset was first used or installed ready for use, the effective life you adopted and why, and the business-use percentage with the evidence behind it. For a self-assessed life, the reasoning is part of the record.

The first year is part-year if the asset was not held from 1 July. Claiming a full year in the year of purchase is a common and easily corrected error, but it is the kind of thing an audit finds without looking hard.