Deduction scenario

Small business pool vs individual depreciation

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.

2025-26 $20k IAWO 15% / 30%

Pool vs individual tracking

	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

→ 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.

FAQ

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.

Tax Accuracy & Sources

Reviewed: March 2026 · Tax year: 2025-26

Compares the small business depreciation pool (15%/30% rates, <$10M turnover) with individual asset tracking (prime cost or diminishing value). Reflects the 2025-26 $20,000 instant asset write-off threshold. Once allocated to the pool, assets generally cannot be removed.

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Small business pool vs individual depreciation

Tax Accuracy & Sources

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