Depreciation Rate for Trucks in Australia (2026 ATO Guide)
What Is the Depreciation Rate for a Truck in Australia?
According to the Australian Taxation Office (ATO), trucks have an effective life of 8 years. This gives you two depreciation rate options:
| Method | Rate | How It Works |
|---|---|---|
| Diminishing Value | 25.00% | Higher deductions in earlier years |
| Prime Cost | 12.50% | Equal deductions each year |
Diminishing value rate = 200% ÷ effective life (200% ÷ 8 = 25.00%). Prime cost rate = 100% ÷ effective life (100% ÷ 8 = 12.50%).
Worked Example: $80,000 Truck
Purchase a truck for $80,000 on 1 July 2025 (start of the financial year) for a full-year deduction:
Diminishing Value Method (25.00%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $80,000 | $20,000 | $60,000 |
| 2026–27 | $60,000 | $15,000 | $45,000 |
| 2027–28 | $45,000 | $11,250 | $33,750 |
| 2028–29 | $33,750 | $8,438 | $25,312 |
| 2029–30 | $25,312 | $6,328 | $18,984 |
| 2030–31 | $18,984 | $4,746 | $14,238 |
| 2031–32 | $14,238 | $3,560 | $10,678 |
| 2032–33 | $10,678 | $2,670 | $8,008 |
| 2033–34 | $8,008 | $2,002 | $6,006 |
| 2034–35 | $6,006 | $1,502 | $4,504 |
Prime Cost Method (12.50%)
| Financial Year | Opening Value | Deduction | Closing Value |
|---|---|---|---|
| 2025–26 | $80,000 | $10,000 | $70,000 |
| 2026–27 | $70,000 | $10,000 | $60,000 |
| 2027–28 | $60,000 | $10,000 | $50,000 |
| 2028–29 | $50,000 | $10,000 | $40,000 |
| 2029–30 | $40,000 | $10,000 | $30,000 |
| 2030–31 | $30,000 | $10,000 | $20,000 |
| 2031–32 | $20,000 | $10,000 | $10,000 |
| 2032–33 | $10,000 | $10,000 | $0 |
Which method is better? Diminishing value gives you $20,000 in Year 1 vs $10,000 with prime cost. Most small businesses prefer diminishing value for the bigger upfront deduction.
First-Year Pro-Rata Rule
If you purchase the truck 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 truck for $80,000 on 1 January 2026 (181 days remaining in the FY).
- Diminishing value: $80,000 × 25.00% × (181/365) = $9,918
- Prime cost: $80,000 × 12.50% × (181/365) = $4,959
Instant Asset Write-Off
If your truck 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 8 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 “Trucks” for ATO Purposes?
The ATO’s 8-year effective life applies to:
- Light trucks and medium trucks
- Heavy rigid trucks
- Delivery trucks
- Tray trucks and tipper trucks
Trucks are not subject to the car depreciation limit. Trailers have a longer effective life of 15 years.
How to Claim Depreciation
- Must be used for business purposes. Only claim the business-use percentage. If you use the truck 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 “Truck” and enter the purchase price and date.
Frequently Asked Questions
What is the ATO effective life for trucks?
The ATO sets the effective life at 8 years for trucks.
Should I use diminishing value or prime cost?
Most small businesses use diminishing value because it gives a bigger deduction in the first year ($20,000 vs $10,000 on a $80,000 truck).
Can I claim the full cost as an immediate deduction?
If the truck 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 truck 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.