How to Claim Equipment Depreciation as a Content Creator

Cameras, computers, lighting rigs, drones, microphones. If you are a content creator, you have probably spent thousands on equipment. The good news is that you can claim these costs on your tax return. But how you claim them depends on the cost, your business-use percentage, and the depreciation method you choose.

The Instant Asset Write-Off

The instant asset write-off is the simplest way to claim equipment. If an asset costs less than $20,000 (the current threshold for small businesses), you can deduct the entire business-use portion in the year you purchase it. No need to depreciate over multiple years.

Comparison of diminishing value and prime cost depreciation methods for creator equipment

This applies to most creator equipment purchases:

The key requirement is that you must be classified as a small business entity, which means your aggregated turnover is less than $10 million. This covers virtually all content creators.

Example: You buy a Sony A7IV camera for $3,500 and use it 80% for content creation. Under the instant asset write-off, you can claim $2,800 (80% of $3,500) as an immediate deduction in the year of purchase.

When You Need to Depreciate Over Time

If an asset costs $20,000 or more, you cannot claim it all at once. Instead, you depreciate it over the asset's effective life as determined by the ATO. There are two methods available:

Diminishing Value Method

This method front-loads your deductions. You claim a larger amount in the first year and progressively less in each subsequent year. The formula is:

Deduction = Base Value x (Days Held / 365) x (200% / Effective Life)

For most creator equipment, the diminishing value method gets you more money back sooner, which is why it is the more popular choice.

Prime Cost Method

This method spreads the deduction evenly across the asset's effective life. The formula is:

Deduction = Cost x (Days Held / 365) x (100% / Effective Life)

Prime cost gives you the same total deduction over time, but the annual amounts are equal and predictable.

Example: You purchase a high-end editing workstation for $22,000 with an effective life of 4 years and 90% business use.

Diminishing value (Year 1): $22,000 x 50% x 90% = $9,900

Prime cost (Year 1): $22,000 x 25% x 90% = $4,950

With diminishing value, you claim almost double in the first year.

Common Equipment and Effective Lives

The ATO publishes effective life rulings for different asset types. Here are the ones most relevant to creators:

Remember, these only apply to assets that cost $20,000 or more. Anything under that threshold can be instantly written off.

The Private Use Percentage

This is where many creators get caught. If you use equipment for both business and personal purposes, you can only claim the business-use percentage. The ATO expects you to make a reasonable estimate.

Here are some practical guidelines:

The key is to be honest and have a reasonable basis for your estimate. If you claim 100% business use on a laptop you also use for Netflix and personal emails, the ATO will challenge it.

Second-Hand Equipment

You can claim depreciation on second-hand equipment just like new equipment. The cost base is what you paid for it, not the original retail price. The instant asset write-off threshold still applies based on what you paid.

If someone gives you equipment, you can use the market value at the time you received it as the cost base for depreciation purposes.

Keeping a Depreciation Schedule

A depreciation schedule is a record of all your depreciable assets, their cost, purchase date, effective life, and business-use percentage. Your accountant will maintain this for you, and it is essential for accurate tax returns.

You should keep:

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