Depreciation of Business Assets
Most businesses have assets which are expected to decline in value over time. These might include assets such as: machinery, tools and safety equipment, motor vehicles, furniture, computers and phones.
Firstly we quantify the total cost of the asset and then know how much of the total cost of each asset you can write off over time. This will depend on the asset’s value and longevity. This type of tax deduction is called – depreciation. It’s a way for businesses to reduce tax obligations on assets that lose value over time due to wear-and-tear or obsolescence.
The cost of an item includes the initial purchase price, plus any additional costs involved in transporting it and setting it up for business use. Eligible assets can be purchased new or second-hand. The way the depreciation is claimed may depend on your size and type of asset.
As it stands there are a few different ways to depreciate your assets:
- Instant Asset write-off
- Temporary full expensing
- General Depreciation rule
- Backing Business Investment – accelerated depreciation
- Capital Works deductions
If you’re considering purchasing assets or would like any assistance with your depreciation don’t hesitate to get in touch with our team to guide you through which depreciation process might best optimise your situation.
