Depreciation Rate for Mobile Phones in Australia (2026 ATO Guide)
What Is the Depreciation Rate for a Mobile Phone in Australia?
According to the Australian Taxation Office (ATO), mobile phones have a effective life of 3 years. This gives you two depreciation rate options:
| Method | Rate | How It Works |
|---|---|---|
| Diminishing Value | 66.67% | Higher deductions in earlier years |
| Prime Cost | 33.33% | Equal deductions each year |
Diminishing value rate = 200% ÷ effective life (200% ÷ 3 = 66.67%). Prime cost rate = 100% ÷ effective life (100% ÷ 3 = 33.33%).
Worked Example: $1,500 Mobile Phone
Purchase a mobile phone for $1,500 on 1 July 2025 (start of the financial year) for a full-year deduction:
Diminishing Value Method (66.67%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $1,500 | $1,000 | $500 |
| 2026–27 | $500 | $333 | $167 |
| 2027–28 | $167 | $111 | $56 |
| 2028–29 | $56 | $37 | $19 |
| 2029–30 | $19 | $19 | $0 |
Prime Cost Method (33.33%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $1,500 | $500 | $1,000 |
| 2026–27 | $1,000 | $500 | $500 |
| 2027–28 | $500 | $500 | $0 |
Which method is better? Diminishing value gives you $1,000 in Year 1 vs $500 with prime cost. Most small businesses prefer diminishing value for the bigger upfront deduction.
First-Year Pro-Rata Rule
If you purchase the phone 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 mobile phone for $1,500 on 1 January 2026 (181 days remaining in the FY).
- Diminishing value: $1,500 × 66.67% × (181/365) = $496
- Prime cost: $1,500 × 33.33% × (181/365) = $248
Instant Asset Write-Off
If your phone 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 3 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 “Mobile Phones” for ATO Purposes?
The ATO’s 3-year effective life applies to:
- Smartphones (iPhone, Samsung Galaxy, Google Pixel, etc.)
- Business mobile phones
- Satellite phones used for business
Tablets have the same 3-year effective life. Laptops have a longer effective life of 4 years.
How to Claim Depreciation
- Must be used for business purposes. Only claim the business-use percentage. If you use the phone 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 “Mobile Phone” and enter the purchase price and date.
Frequently Asked Questions
What is the ATO effective life for mobile phones?
The ATO sets the effective life at 3 years for mobile phones.
Should I use diminishing value or prime cost?
Most small businesses use diminishing value because it gives a bigger deduction in the first year ($1,000 vs $500 on a $1,500 phone).
Can I claim the full cost as an immediate deduction?
If the phone 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 phone 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.