Depreciation Rate for Espresso Machines in Australia (2026 ATO Guide)
What Is the Depreciation Rate for an Espresso Machine in Australia?
According to the Australian Taxation Office (ATO), espresso machines have a effective life of 10 years. This gives you two depreciation rate options:
| Method | Rate | How It Works |
|---|---|---|
| Diminishing Value | 20.00% | Higher deductions in earlier years |
| Prime Cost | 10.00% | Equal deductions each year |
Diminishing value rate = 200% ÷ effective life (200% ÷ 10 = 20.00%). Prime cost rate = 100% ÷ effective life (100% ÷ 10 = 10.00%).
Worked Example: $8,000 Espresso Machine
Purchase an espresso machine for $8,000 on 1 July 2025 (start of the financial year) for a full-year deduction:
Diminishing Value Method (20.00%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $8,000 | $1,600 | $6,400 |
| 2026–27 | $6,400 | $1,280 | $5,120 |
| 2027–28 | $5,120 | $1,024 | $4,096 |
| 2028–29 | $4,096 | $819 | $3,277 |
| 2029–30 | $3,277 | $655 | $2,622 |
| 2030–31 | $2,622 | $524 | $2,098 |
| 2031–32 | $2,098 | $420 | $1,678 |
| 2032–33 | $1,678 | $336 | $1,342 |
| 2033–34 | $1,342 | $268 | $1,074 |
| 2034–35 | $1,074 | $215 | $859 |
| 2035–36 | $859 | $172 | $687 |
| 2036–37 | $687 | $137 | $550 |
Prime Cost Method (10.00%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $8,000 | $800 | $7,200 |
| 2026–27 | $7,200 | $800 | $6,400 |
| 2027–28 | $6,400 | $800 | $5,600 |
| 2028–29 | $5,600 | $800 | $4,800 |
| 2029–30 | $4,800 | $800 | $4,000 |
| 2030–31 | $4,000 | $800 | $3,200 |
| 2031–32 | $3,200 | $800 | $2,400 |
| 2032–33 | $2,400 | $800 | $1,600 |
| 2033–34 | $1,600 | $800 | $800 |
| 2034–35 | $800 | $800 | $0 |
Which method is better? Diminishing value gives you $1,600 in Year 1 vs $800 with prime cost. Most small businesses prefer diminishing value for the bigger upfront deduction.
First-Year Pro-Rata Rule
If you purchase the espresso machine partway through the financial year, your first-year deduction is pro-rated based on the number of days you held the asset.
Example: Buy an espresso machine for $8,000 on 1 January 2026 (181 days remaining in the FY).
- Diminishing value: $8,000 × 20.00% × (181/365) = $793
- Prime cost: $8,000 × 10.00% × (181/365) = $397
Instant Asset Write-Off
If your espresso machine 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 10 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 “Espresso Machines” for ATO Purposes?
The ATO’s 10-year effective life applies to:
- Commercial espresso machines
- Automatic coffee machines for business use
- Bean-to-cup machines in offices
- Pod/capsule machines used for business
Coffee grinders have a shorter effective life of 8 years. Commercial fridges have a 12-year effective life.
How to Claim Depreciation
- Must be used for business purposes. Only claim the business-use percentage. If you use the espresso machine 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 “Espresso Machine” and enter the purchase price and date.
Frequently Asked Questions
What is the ATO effective life for espresso machines?
The ATO sets the effective life at 10 years for espresso machines.
Should I use diminishing value or prime cost?
Most small businesses use diminishing value because it gives a bigger deduction in the first year ($1,600 vs $800 on a $8,000 espresso machine).
Can I claim the full cost as an immediate deduction?
If the espresso machine 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 espresso machine 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.