Whether you’re setting up your first business space or refreshing an existing office, understanding how depreciation works for office furniture and equipment can make a real difference to your tax planning and cash flow. In this guide, we’ll walk you through what depreciation is, how to calculate it for your office assets, and what that means for your business – all in straightforward terms.
What Do We Mean by Depreciation?
Depreciation is essentially the accounting way of recognising that items like desks, chairs, cabinets and workstations lose value over time as they’re used in your business. Rather than claiming the full cost in one go, the Australian Taxation Office (ATO) allows you to spread that cost over the asset’s “effective life” – the period over which the item is expected to be useful in your business.
Here’s Why It Matters
For many small businesses and sole traders, depreciation isn’t just a bookkeeping concept; it’s a legitimate tax deduction. By systematically recognising the decline in value of your office fit-out assets, you can reduce your assessable income and keep more money working in your business.
Two Ways to Work Out Depreciation
The ATO allows two main methods for claiming depreciation on office furniture and equipment:
Prime Cost Method (Straight Line)
This is the simplest way to calculate depreciation. You spread the cost evenly over the asset’s effective life.
Formula:
Annual Depreciation = Cost ÷ Effective Life
Example: If you buy a desk for $1000 and it has an effective life of 10 years, you can claim $100 per year. This approach works well if you expect the item to be used steadily over time.
Diminishing Value Method
With this method, you claim a larger deduction in the early years, reflecting how some assets lose value more quickly when they’re new. The calculation starts with a set percentage based on the effective life and applies it to the remaining value of the item each year. This can mean higher deductions initially — a good option if you’re keen to maximise tax benefits in the short term.
Effective Life – What It Means and How It’s Set
For depreciation purposes, the effective life is the number of years the ATO expects an item to remain useful. While effective lives vary depending on the type of asset and how intensively it’s used, ATO data suggests:
- Chairs: Generally around 10 years
- Desks: Can range up to 20 years
- Storage units and workstations: Often based on materials and configuration
You can also use the ATO’s Depreciation and Capital Allowances Tool to help calculate the decline in value of your assets.
Immediate Deductions vs Depreciation Schedules
If an item costs $300 or less and is used mainly for work, you may be able to claim an immediate deduction for the full amount in the year of purchase — no depreciation schedule needed. For items over $300, including most commercial-grade office furniture, you’ll generally need to depreciate them over their effective life unless you group them in a “low-value pool” (a separate ATO concession for a bunch of small assets).
Using Depreciation in Your Business Records
To claim depreciation, you’ll need to keep good records — including invoices and notes on how much each item is used for work. If the furniture is used partly for private purposes (for example, in a home office), only the work-related portion is deductible. Depreciation usually gets claimed as part of your annual tax return under decline in value for depreciating assets.
Here’s a Real-World Tip from the Office Furniture Brisbane Team
At Office Furniture Brisbane, we see many businesses invest in quality furniture that lasts — and that’s good for depreciation calculations too. High-quality items often have longer useful lives and retain value better over time, meaning your financial planning becomes more predictable. If you’re outfitting a new office, refreshing an existing space or setting up a home workspace, consider these points:
- Plan your purchases so depreciation aligns with your financial year and growth plans
- Choose durable furniture that fits your workspace and delivers long-term value
- Keep detailed records of purchases, use and maintenance for accurate claims
And if you need help selecting the right furniture for your business — whether it’s ergonomic chairs, boardroom tables, height-adjustable desks or storage solutions — our team can help you match your needs with products that suit your workspace and budget.
Ready to invest in premium quality office furniture?
Beyond tax considerations, great office furniture supports productivity, comfort and business image. Whether you’re creating a client-facing area, a collaborative workspace or a stylish reception; investing in the right solutions and understanding how to maximise tax benefits from those purchases helps your business both financially and operationally.
At Office Furniture Brisbane, we don’t just sell furniture — we partner with you to build workspaces that work. From space planning and product selection to delivery and installation, we bring experience and personalised service to every job.
Ready to talk about your office needs? Get in touch with our team today — we’re here to help you make smart choices that last.