Who can claim
This deduction is available to individuals and companies.
- You held the depreciating asset and used it or had it installed ready for a taxable purpose.
- You can support the effective life and taxable-use percentage.
What you cannot claim
- Private use is excluded.
- An immediate-deduction rule may apply instead of decline in value, depending on the taxpayer and asset.
- An employee cannot claim an asset the employer or another party provided, paid or reimbursed; a partial reimbursement reduces the eligible cost.
- A taxable allowance does not create an asset deduction; claim decline in value only from the eligible cost actually incurred.
How the amount is worked out
Prime cost or diminishing-value method, apportioned for days held and taxable use, subject to the relevant asset rules.
You can work this amount out step by step in the Deductit calculators.
Records the ATO expects
- Purchase invoice
- Date first used or installed
- Effective-life support
- Taxable-use calculation
Where this rule comes from
Primary source: Income Tax Assessment Act 1997 section 40-25 (Section 40-25). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.
Supporting sources:
- ATO guide to depreciating assets 2025 (Guide to depreciating assets 2025)