Tax deductions for office furniture

Depreciation On Office Furniture

Updated April 2023

Are you a business owner who’s looking to buy office furniture? Then it’s important that you know about depreciation on office furniture.

Depreciation refers to the decrease in value of an asset over time and it’s something that affects all tangible assets, including office furniture.

In this article, I’ll be discussing what tax depreciation is and how it affects your office furniture.
But also why it’s important that you consider depreciation implications when making purchasing decisions.

As a fellow business owner I know how expensive running costs can get. So it’s essential to understand how depreciation works and how it can affect your finances. Aside from the purchase of your property – or rent if you’re leasing – office furniture is one of the most significant investments that businesses make, and its value decreases over time due to wear and tear.

So if you’re not savvy on depreciation you may end up missing out on tax savings and therefore, spending more money than necessary on new office equipment.

What Is Depreciation?

Depreciation is the decline in value of assets within and on your investment property – or – business.

Common items for depreciation in a business are items such as:

There are several methods used to calculate depreciation, including the straight-line method (found in both the Prime Cost method and the Low Value Pool method). There’s also the accelerated method such as the Diminishing Value method. Here, office furniture is depreciated at 150% of the Prime Cost method rate. These are knonw as Division 40 items

The implications of depreciation are significant for businesses and individuals alike. For businesses in particular, depreciation can affect their financial statements and tax liabilities and ability to borrow more capital for expanding their business.

How Is Office Furniture Depreciated?

Now that you’ve purchased office furnishings, it’s important to understand how it will be depreciated over time.

Depreciation is the reduction in value of an asset over its useful life, and office furniture is no exception.

There are different depreciation methods available, including straight-line and accelerated methods, but the most common one for office furniture is the straight-line method.

The straight-line method spreads the cost of the asset evenly over its useful life, taking into account any scrapping value that may be realised at the end of its useful life.


Scrapping value is what the asset is worth on paper at the end of its useful life, when it’s sold or when it’s disposed of.

Depreciation can have tax implications as well since it reduces taxable income, so it’s important to consult with a good tax professional for guidance.

When it comes time to dispose of the asset, whether by sale or disposal, any gain or loss on disposal must also be accounted for properly within your tax returns.

What Are The Benefits Of Depreciation?

Depreciationhas many benefits to you financially. Although it may sound like a negative term, in reality, there are many upsides to it.

When it comes to office furniture, depreciation can actually provide tax benefits for businesses. By deducting the depreciation of office furniture on taxes, companies can lower their taxable income and ultimately save money. This is a great way to reduce your tax bill while also ensuring that your office is up to date with modern furnishings.

Another benefit of depreciation is its usefulness in financial reporting. Depreciation can help businesses accurately track the value of their assets over time. This not only assists in asset management but also helps with accounting methods such as calculating profits and losses.

By depreciating office furniture, companies can better understand their costs and make informed decisions about future investments. Additionally, cost savings can be achieved by prolonging the life of existing assets through proper maintenance and repair rather than constantly purchasing new ones.

In summary, the benefits of depreciation extend beyond just accounting methods and cost savings. It provides tax benefits for businesses while allowing them to manage their assets more efficiently. So next time you think about replacing your office furniture, consider the advantages of depreciation before making any drastic decisions.

How To Calculate Depreciation On Office Furniture

Now that we have a good understanding of what depreciation is and why it’s important, let’s dive into how to calculate depreciation on office furniture.

One of the most commonly used methods for calculating depreciation is the straight-line method. This method involves dividing the cost of the asset by its useful life, which is the amount of time the asset is expected to be in use before it becomes obsolete or no longer useful.

To calculate depreciation using the straight-line method, you’ll need to know two key pieces of information:

  • the cost of the furniture
  • its useful life.

Once you have these figures, you simply divide 100% by the useful life. This will give you the annual depreciation percentage rate.
For furniture over $1,000 in value, this is typically 7.5%
Then you simply multiply the purchase price of each item by 7.5% to get your answer.

For example:
A $2,000 chair depreciates at 7.5% p.a. That means you can claim $150/year in depreciation on that chair. ($2,000 x 7.5% = $150)

It’s important to note that there are other methods for calculating depreciation as well, such as accelerated depreciation, which allows businesses to take larger deductions in earlier years instead of spreading them out evenly over time.

However, this method can have tax implications that should be carefully considered before implementing.

Ultimately, whichever method you choose will depend on your business’s specific needs and financial goals.

Strategies For Managing Depreciation On Office Furniture

When it comes to managing depreciation on office furniture, there are a few key strategies to keep in mind.

First and foremost, it’s important to have a clear replacement schedule in place. This will help you plan ahead for when certain pieces of furniture may need to be replaced, allowing you to budget accordingly.

Another important consideration is maintenance costs. Regular upkeep can help extend the lifespan of your office furniture and minimise the amount of depreciation you experience.

Additionally, proper asset disposal can also play a role in managing depreciation. When it’s time to get rid of old furniture, selling or donating it can help recoup some of its market value and prevent it from dragging down your overall asset value.

With these strategies in mind, you can ensure that your office furniture remains an asset rather than a liability on your balance sheet.

Frequently Asked Questions

How Often Does Office Furniture Need To Be Revalued For Depreciation Purposes?

When it comes to office furniture, one of the most important things you need to know is how often it needs to be revalued for depreciation purposes.

Fortunately, if you get your depreciation schedule setup by a reputable Quantity Surveyor, you’ll only need to have them valued once.

Can the depreciation rate be adjusted based on the condition of the Office Furniture?

Yes, the ATO allows the Quantity Surveyor to use customised depreciation rates based on the condition, quality and intended use of any item that is eligible for depreciation deductions.


Can the depreciation method used for office furniture be changed over time?

Yes… and no. So it depends on what method you are using.
You cannot move items from the Prime Cost into the Diminishing Value method, or vice versa.
But you can move items from the Diminishing Value method into the Low Value pool once their written down value has dropped below $1,000.

In Summary

As a registered Quantity Surveyor, I strongly recommend that businesses keep track of their office furniture depreciation to ensure accurate asset valuation. Commerical property can offer huge tax deductions if handled correctly by your Accountant and Quantity Surveyor.

Have any Questions?

Simply get in touch with me here and I’ll personally address any questions you have.

Particularly if you are new to investment property ownership. I’ll happily share some tips with you.

If you found this helpful, you may also find some of my other articles beneficial too. And to see some real life examples of what our clients have been receiving in tax depreciation deductions, check out our Client Portfolio page. But it’s usually best to start at the beginning by visiting our home page

This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying

Published April 2023