Depreciation Rate for Desktop Computers in Australia (2026 ATO Guide)
What Is the Depreciation Rate for a Desktop Computer in Australia?
According to the Australian Taxation Office (ATO), desktop computers have a effective life of 4 years. This gives you two depreciation rate options:
| Method | Rate | How It Works |
|---|---|---|
| Diminishing Value | 50.00% | Higher deductions in earlier years |
| Prime Cost | 25.00% | Equal deductions each year |
Diminishing value rate = 200% ÷ effective life (200% ÷ 4 = 50.00%). Prime cost rate = 100% ÷ effective life (100% ÷ 4 = 25.00%).
Worked Example: $2,500 Desktop Computer
Purchase a desktop computer for $2,500 on 1 July 2025 (start of the financial year) for a full-year deduction:
Diminishing Value Method (50.00%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $2,500 | $1,250 | $1,250 |
| 2026–27 | $1,250 | $625 | $625 |
| 2027–28 | $625 | $312 | $313 |
| 2028–29 | $313 | $156 | $157 |
| 2029–30 | $157 | $78 | $79 |
| 2030–31 | $79 | $40 | $39 |
Prime Cost Method (25.00%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $2,500 | $625 | $1,875 |
| 2026–27 | $1,875 | $625 | $1,250 |
| 2027–28 | $1,250 | $625 | $625 |
| 2028–29 | $625 | $625 | $0 |
Which method is better? Diminishing value gives you $1,250 in Year 1 vs $625 with prime cost. Most small businesses prefer diminishing value for the bigger upfront deduction.
First-Year Pro-Rata Rule
If you purchase the desktop partway through the financial year, your first-year deduction is pro-rated based on the number of days you held the asset.
Example: Buy a desktop computer for $2,500 on 1 January 2026 (181 days remaining in the FY).
- Diminishing value: $2,500 × 50.00% × (181/365) = $620
- Prime cost: $2,500 × 25.00% × (181/365) = $310
Instant Asset Write-Off
If your desktop costs less than the instant asset write-off threshold ($20,000 for the 2024–25 income year), you may be able to deduct the entire cost immediately rather than depreciating over 4 years. This applies to small businesses with aggregated turnover under $10 million.
Always check the current ATO guidance as thresholds can change each financial year.
What Counts as “Desktop Computers” for ATO Purposes?
The ATO’s 4-year effective life applies to:
- Desktop PCs and towers
- All-in-one computers (iMac, etc.)
- Workstations
- Mini PCs and NUCs used as desktops
Laptops also have a 4-year effective life. Computer monitors may have a separate effective life depending on whether they're bundled with the computer.
How to Claim Depreciation
- Must be used for business purposes. Only claim the business-use percentage. If you use the desktop 70% for work, claim 70% of the depreciation.
- Choose your method — diminishing value or prime cost. You must stick with the same method for the life of that asset.
- Keep records — purchase receipt, proof of business use percentage, and your depreciation schedule.
- Report in your tax return — include the deduction amount in your business expenses or work-related deductions.
Calculate Your Depreciation
Use our free depreciation calculator to get an instant depreciation schedule — just select “Desktop Computer” and enter the purchase price and date.
Frequently Asked Questions
What is the ATO effective life for desktop computers?
The ATO sets the effective life at 4 years for desktop computers.
Should I use diminishing value or prime cost?
Most small businesses use diminishing value because it gives a bigger deduction in the first year ($1,250 vs $625 on a $2,500 desktop).
Can I claim the full cost as an immediate deduction?
If the desktop costs less than the instant asset write-off threshold and you are an eligible small business, yes — you can deduct the full cost in the year of purchase. If you also use it personally, only claim the business-use percentage.
What if I sell or dispose of the desktop before it’s fully depreciated?
You’ll need to do a balancing adjustment. If you sell it for more than the written-down value, the difference is assessable income. If you sell for less, you can claim the remaining amount as a deduction.