Small Business Pool vs Individual Depreciation (2025-26)
Small businesses can choose between pooling assets for simplified depreciation or tracking each asset individually. The right choice affects how quickly you claim deductions and how much record keeping you need.
| Small Business Pool | Individual Asset Tracking | |
|---|---|---|
| First year rate | 15% of cost | Based on effective life |
| Subsequent years | 30% of pool balance | Based on effective life |
| Eligibility | Turnover under $10M | Any business |
| Record keeping | Simplified (one pool balance) | Track each asset separately |
| Instant write-off | Under $20,000 per asset | Not available |
How the Small Business Pool Works
The small business pool (SBP) groups depreciating assets together. Instead of tracking each asset's decline in value separately, you maintain a single pool balance:
- Year 1: Deduct 15% of the asset's cost (pro-rated for the portion of the year you held it)
- Year 2 onwards: Deduct 30% of the opening pool balance each year
- Pool balance below $20,000: Write off the remaining balance entirely
- New assets: Added to the pool at their cost and depreciated at 15% in their first year
Instant Asset Write-Off (2025-26)
Small businesses with turnover under $10 million can instantly deduct assets costing less than $20,000 each in the year they are first used or installed ready for use.
- Each asset is assessed individually (you can write off multiple assets under $20,000)
- The threshold is per asset, not a total annual cap
- Assets at or above $20,000 are added to the small business pool
- GST-registered businesses use the GST-exclusive cost; non-registered use GST-inclusive
When the Pool Is Better
Small Business Pool
$25,000 office fitout (10-year effective life):
- Year 1: $25,000 x 15% = $3,750
- Year 2: $21,250 x 30% = $6,375
- Year 3: $14,875 x 30% = $4,463
- Total after 3 years: $14,588
Individual (Prime Cost)
$25,000 office fitout (10-year effective life):
- Year 1: $25,000 x 10% = $2,500
- Year 2: $25,000 x 10% = $2,500
- Year 3: $25,000 x 10% = $2,500
- Total after 3 years: $7,500
For long-life assets, the pool's 30% declining balance rate significantly accelerates deductions compared to individual tracking.
When Individual Tracking Is Better
Small Business Pool
$30,000 laptop fleet (3-year effective life):
- Year 1: $30,000 x 15% = $4,500
- Year 2: $25,500 x 30% = $7,650
- Year 3: $17,850 x 30% = $5,355
- Total after 3 years: $17,505
Individual (Diminishing Value)
$30,000 laptop fleet (3-year effective life, 66.67% DV):
- Year 1: $30,000 x 66.67% = $20,000
- Year 2: $10,000 x 66.67% = $6,667
- Year 3: $3,333 x 66.67% = $2,222
- Total after 3 years: $28,889
For short-life assets, individual diminishing value depreciation can be much faster than the pool's 15%/30% rates.
Record Keeping Differences
The small business pool significantly reduces record keeping burden:
- Pool: Track a single pool balance, add new assets, remove disposals. One calculation per year.
- Individual: Track each asset's cost, effective life, method (prime cost or diminishing value), and written-down value. Separate calculation per asset per year.
- Disposals: Pool disposals reduce the pool balance. Individual disposals require balancing adjustment calculations.
- Low-value pool: If the pool balance falls below $20,000 at the end of a year, you can write off the entire remaining balance.
Open the depreciation app
Compare pool and individual depreciation for your specific assets, effective lives, and business structure.
Open Depreciation CalculatorFrequently Asked Questions
What is the small business depreciation pool?
The small business pool (SBP) is a simplified depreciation method for businesses with turnover under $10 million. Assets are pooled together and depreciated at 15% in the first year and 30% in subsequent years, rather than tracking each asset individually.
What is the instant asset write-off threshold for 2025-26?
For the 2025-26 financial year, eligible small businesses can instantly write off assets costing less than $20,000 (each). Assets at or above this threshold are added to the small business pool or depreciated individually.
When is individual asset depreciation better than the pool?
Individual tracking can be better when an asset has a short effective life (e.g., 2-3 years), as the annual depreciation rate may exceed the pool's 30%. It's also preferable for high-value assets where you want to track disposal proceeds accurately.
Can I move assets between the pool and individual tracking?
Once an asset is allocated to the small business pool, it generally cannot be removed. However, you can choose for each new asset whether to add it to the pool or depreciate it individually, provided you meet the eligibility criteria.