Income tax Dates
This method depreciates assets every year by the same amount. Sometimes this method is called the cost price basis.
Find your asset's rate
Use our Depreciation rate finder and calculator to find the depreciation rate and calculate depreciation for a business asset.
Or use the IR265 guide to find the depreciation rate for your asset and method and continue with these steps.
Use this tool to find the depreciation rate and calculate depreciation for a business asset.
Go to this tool
If you bought a computer terminal for your business, the IR265 guide’s contents page will direct you to ‘Computers’ on page 47.
Then on page 47 you’ll see ‘Terminals’ with a straight-line (SL) depreciation rate of 21%.
Work out depreciation using the cost value
Each year work out depreciation on your asset by its rate on the cost value – the original amount you paid for it or it was valued at.
Cost value × straight-line rate % = amount of depreciation to claim in your income tax return
Claim the same amount each year until you’ve claimed the asset’s full cost value. You may need to claim a partial amount on the first or last year.
If you only used the asset for part of the year, or if you do not use it 100% for business, go to steps 3 and 4.
At the start of the financial year you paid $1,200 for a computer terminal with a straight-line depreciation rate of 21%. You use it 100% for business, for a full 12 months each year.
Work out depreciation like this.
Cost value $1,200 × SL rate 21% = $252 depreciation to claim in your tax return.
| Year (from when you first bought the terminal) | Depreciation amount to claim in your return | The terminal’s adjusted tax value |
|---|---|---|
| Year 1 | $252 | $948 |
| Year 2 | $252 | $696 |
| Year 3 | $252 | $444 |
| Year 4 | $252 | $192 |
| Year 5 | $192 | $0 |
Work out how many months you've used the asset
If you bought the asset partway through the financial year, or if you started using it for business partway through the year, then you need to work out depreciation for the number of months you used it for business. Count part-months as whole months.
Use the depreciation amount from step 2.
Depreciation x months used ÷ 12
If you used the asset in business for the full 12 months of the financial year, you do not need to do this step.
If you bought a computer terminal to use in your business, but 6 months into the year decided to use it personally instead, work out depreciation like this.
Using the depreciation amount from step 2:
Depreciation $252 × 6 months ÷ 12 = $126
Work out business use percentage
If you use the asset personally throughout the year as well as for business, you also need to:
- work out how much the asset is used for business, as a percentage
- multiply your final depreciation amount by that percentage.
Depreciation amount × business use percentage = depreciation to claim in your return.
If you use the asset 100% for business, you do not need to do this step.
If you use your computer terminal for business 40% of the time and personally 60% of the time, and you’ve worked out depreciation at $126 in the previous step, do this calculation.
Depreciation amount $126 × business use percentage 40% = $50.40 depreciation to claim in your return.
What happens next
Keep working out your depreciation like this each year until you’ve done one of the following.
- You’ve claimed the asset’s full cost value – its original purchase price or valuation.
- You no longer use the asset in your business.
For more information, see our Depreciation guide for businesses – IR260.
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