Understanding film equipment depreciation in Australia is essential for production companies and freelance crew. Film production equipment can be depreciated over its ATO-determined effective life using either the prime cost or diminishing value method. Small businesses (under $10 million turnover) can instantly write off assets costing less than $20,000 each until 30 June 2026. For higher-value gear, standard depreciation applies, and the decline in value may also count toward your QAPE for Producer Offset claims.
Instant Asset Write-Off for Film Production
The $20,000 instant asset write-off has been extended to 30 June 2026 for small business entities with an aggregated annual turnover of less than $10 million. This is particularly relevant for independent producers, freelance cinematographers, and small production companies purchasing equipment.
Key points for film production businesses:
- The $20,000 threshold applies per asset, not in total. You can write off multiple qualifying items in the same financial year.
- The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026.
- Common film equipment under $20,000 includes wireless microphone kits, LED panel lights, field monitors, camera sliders, audio recorders, and drone units.
- Assets costing $20,000 or more cannot be instantly written off. They must be depreciated over their effective life or placed in the small business simplified depreciation pool (15% in the first year, 30% thereafter).
Note that temporary full expensing ended on 30 June 2023. The unlimited write-off that was available during the COVID recovery period no longer applies. Standard depreciation rules and the $20,000 small business threshold are now the primary concessions available.
If you are a creative freelancer purchasing your own gear, these thresholds can significantly reduce your taxable income in the year of purchase.
Film Equipment Depreciation Australia: ATO Effective Life Table
The Australian Taxation Office determines the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997. The current determinations are published in TR 2022/1 (applicable from 1 July 2022) and the Income Tax (Effective Life of Depreciating Assets) Determination 2025.
The table below sets out the effective life and depreciation rates for common film and television production equipment. Rates are calculated using the ATO formulas: Prime Cost = 100% ÷ Effective Life and Diminishing Value = 200% ÷ Effective Life (for assets acquired after 9 May 2006).
Cameras and Lenses
| Equipment Type | Effective Life (Years) | Prime Cost Rate (%) | Diminishing Value Rate (%) |
|---|---|---|---|
| Cinema cameras (digital — e.g. ARRI, RED, Blackmagic) | 5 | 20.00 | 40.00 |
| Film cameras (16mm / 35mm) | 10 | 10.00 | 20.00 |
| Broadcast / ENG cameras (portable) | 8 | 12.50 | 25.00 |
| Studio cameras | 10 | 10.00 | 20.00 |
| Camera lenses (cinema / broadcast) | 12 | 8.33 | 16.67 |
| Lens accessories (filters, matte boxes) | 12 | 8.33 | 16.67 |
| Video assist systems (monitors, recorders, transmitters) | 3 | 33.33 | 66.67 |
Lighting Equipment
| Equipment Type | Effective Life (Years) | Prime Cost Rate (%) | Diminishing Value Rate (%) |
|---|---|---|---|
| Portable lighting (LED panels, Fresnels, tungsten) | 10 | 10.00 | 20.00 |
| Studio lighting (fixed installations) | 15 | 6.67 | 13.33 |
| HMI lights | 10 | 10.00 | 20.00 |
| Lighting control systems (dimmers, DMX) | 10 | 10.00 | 20.00 |
| Lighting grids (fixed) | 20 | 5.00 | 10.00 |
Sound and Audio Equipment
| Equipment Type | Effective Life (Years) | Prime Cost Rate (%) | Diminishing Value Rate (%) |
|---|---|---|---|
| Field / boom microphones | 5 | 20.00 | 40.00 |
| Studio microphones | 10 | 10.00 | 20.00 |
| Wireless microphone systems | 5 | 20.00 | 40.00 |
| Sound mixing consoles | 5 | 20.00 | 40.00 |
| Digital audio recorders (field) | 3 | 33.33 | 66.67 |
| Audio effects and processing units | 12 | 8.33 | 16.67 |
Grip Equipment
| Equipment Type | Effective Life (Years) | Prime Cost Rate (%) | Diminishing Value Rate (%) |
|---|---|---|---|
| Camera cranes and jibs | 10 | 10.00 | 20.00 |
| Dollies | 12 | 8.33 | 16.67 |
| Dolly track | 5 | 20.00 | 40.00 |
| Tripods and fluid heads | 10 | 10.00 | 20.00 |
| Camera sliders | 2 | 50.00 | 100.00 |
| Gimbals and stabiliser systems | 3 | 33.33 | 66.67 |
| Specialised rigs (car mounts, sea rigs) | 2 | 50.00 | 100.00 |
Post-Production, Monitors and Other Equipment
| Equipment Type | Effective Life (Years) | Prime Cost Rate (%) | Diminishing Value Rate (%) |
|---|---|---|---|
| Non-linear editing systems (e.g. Avid, DaVinci) | 4 | 25.00 | 50.00 |
| Editing workstations (computers) | 4 | 25.00 | 50.00 |
| LCD / OLED monitors (production and grading) | 5 | 20.00 | 40.00 |
| Hard disk video recorders | 3 | 33.33 | 66.67 |
| Drones — rotary wing (e.g. DJI Inspire) | 2 | 50.00 | 100.00 |
| Drones — fixed wing | 3 | 33.33 | 66.67 |
| Portable generators | 10 | 10.00 | 20.00 |
| Production vehicles (cars, vans) | 8 | 12.50 | 25.00 |
Sources: ATO TR 2022/1; Income Tax (Effective Life of Depreciating Assets) Determination 2025. Industry categories: Motion picture and video production (55110), Television broadcasting (56210). Rates rounded to two decimal places. Always confirm the applicable effective life for your specific asset — the ATO’s effective life lookup tool provides the definitive reference.
Prime Cost vs Diminishing Value: Which Method to Choose
The ATO allows two methods for calculating the decline in value of depreciating assets. You can choose a different method for each asset, but once chosen, you generally cannot switch.
Prime Cost Method
The prime cost method (also called straight-line) spreads the deduction evenly over the asset’s effective life.
Formula: Asset cost × (days held ÷ 365) × (100% ÷ effective life)
Example: A digital cinema camera purchased for $45,000 with a 5-year effective life:
- Annual deduction: $45,000 × 20% = $9,000 per year
- Same amount each year until fully depreciated
Diminishing Value Method
The diminishing value method provides a larger deduction in the earlier years, decreasing over time. For assets acquired after 9 May 2006, the formula uses 200% (not 150%).
Formula: Base value × (days held ÷ 365) × (200% ÷ effective life)
Example: The same $45,000 camera using diminishing value:
- Year 1: $45,000 × 40% = $18,000
- Year 2: $27,000 × 40% = $10,800
- Year 3: $16,200 × 40% = $6,480
- Year 4: $9,720 × 40% = $3,888
- Year 5: $5,832 × 40% = $2,333 (remaining balance written off)
Which is Better for Film Production?
For most production companies, the diminishing value method is preferable because:
- Front-loaded deductions match reality — film equipment loses value rapidly in the first few years as newer technology supersedes it.
- Cash flow benefit — larger deductions in early years reduce taxable income when you are most likely recovering the cost of the purchase.
- Technology cycle alignment — digital cameras and editing systems often become functionally obsolete well before their effective life expires.
However, the prime cost method may suit businesses that prefer predictable, even deductions for budgeting purposes, or where the asset is expected to maintain consistent utility throughout its life (for example, high-end cinema lenses).
Small Business Simplified Depreciation Pool
Small businesses (aggregated turnover under $10 million) can choose to use the simplified depreciation rules instead of tracking each asset individually. Under this system:
- Assets costing less than $20,000 are instantly written off (until 30 June 2026).
- Assets costing $20,000 or more are placed in a general small business pool.
- The pool is depreciated at 15% in the first income year the asset is added, and 30% each year thereafter.
- If the pool balance falls below the instant asset write-off threshold at the end of an income year, the entire remaining balance can be written off.
This is often the simplest approach for small film production companies that accumulate a mix of equipment over time. It avoids the need to track individual depreciation schedules for every light, microphone, and cable.
Depreciation and QAPE
If your production is claiming the Producer Offset (40% for feature films, 30% for other formats), understanding how equipment depreciation interacts with Qualifying Australian Production Expenditure (QAPE) is critical.
How Owned Equipment Affects QAPE
QAPE is based on expenditure incurred in the making of the film. For owned equipment, the relevant QAPE amount is typically the portion of depreciation attributable to the production period, not the full purchase price. Specifically:
- The decline in value of owned equipment used in the production, calculated on a reasonable basis for the period the equipment is used on the project, can be included as QAPE.
- If a camera is owned by the production company and used across multiple projects, only the depreciation apportioned to the specific production qualifies.
- The equipment must be located in Australia at the time it is used in the making of the film.
Hired Equipment and QAPE
Rental payments for equipment hired from Australian suppliers are generally included in QAPE in full, provided the goods are located in Australia when used. This is one reason many productions prefer to hire rather than purchase — the full rental cost counts toward QAPE, whereas owned equipment only contributes its depreciation portion.
Use our Producer Offset Calculator to model how equipment costs affect your total offset claim.
Hired vs Owned Equipment: Tax Treatment Comparison
The decision to hire or buy film equipment has significant tax implications beyond QAPE. Here is a comparison of the key differences:
| Factor | Hired Equipment | Owned Equipment |
|---|---|---|
| Tax deduction timing | Full rental cost deductible in the year incurred | Depreciated over effective life (or instantly if under $20,000) |
| QAPE inclusion | Full hire cost included | Only depreciation apportioned to the production |
| GST | Input tax credits on each rental payment | Input tax credit on purchase (one-off) |
| Cash flow | Spread over production period | Large upfront outlay |
| Residual value | Nil — returned after use | Asset retained (can be sold or reused) |
| Best for | Single productions, specialised gear, maximising QAPE | Ongoing use across multiple productions |
For productions that are chasing the Producer Offset, hiring Australian equipment often makes more financial sense because the full hire cost inflates QAPE, directly increasing the offset amount. However, if you are a production company running multiple projects per year, owning core equipment (cameras, lenses, lighting kits) can be more cost-effective in the long run.
Below are common questions about film equipment depreciation in Australia.
Frequently Asked Questions
Can I claim instant asset write-off on a $50,000 cinema camera?
Not under the current rules. The $20,000 instant asset write-off threshold (available until 30 June 2026) only applies to assets costing less than $20,000 each. A $50,000 camera must be depreciated over its 5-year effective life using either the prime cost or diminishing value method, or placed in the small business depreciation pool if you are eligible.
What happens if I sell film equipment before it is fully depreciated?
When you sell a depreciating asset, you may have a balancing adjustment. If the sale price exceeds the asset’s adjustable value (written-down value), the difference is included in your assessable income. If the sale price is less than the adjustable value, you can claim the shortfall as a deduction. This is covered under Division 40 of the ITAA 1997.
Can I self-assess the effective life of my film equipment?
Yes. The ATO allows you to self-assess the effective life of any depreciating asset instead of using the Commissioner’s determination. You must make a reasonable estimate considering the asset’s physical life, the pattern of use, and the likelihood of it becoming obsolete. This can be useful for specialised film equipment that may wear out faster than standard ATO estimates suggest. You must keep records of how you arrived at your self-assessed life.
Does depreciation on my own equipment count toward QAPE?
Yes, but only the portion attributable to the specific production. If you own a camera worth $60,000 and use it on a single production for 3 months, you can include the depreciation for that 3-month period as QAPE. The equipment must be located in Australia during use. See our QAPE tracking guide for more detail.
Is it better to hire or buy equipment for the Producer Offset?
From a QAPE maximisation perspective, hiring is generally better because the full hire cost is included in QAPE. If you own the equipment, only the depreciation apportioned to the production period counts. However, buying makes sense if you produce multiple projects per year and the equipment will be used continuously. The right choice depends on your production volume and cash flow.
Can a sole trader claim equipment depreciation for freelance film work?
Absolutely. Sole traders working in film production can claim depreciation on equipment used to earn assessable income. If you are a freelance cinematographer, sound recordist, or editor, you can depreciate your own gear under the same ATO rules. If your aggregated turnover is under $10 million, you also have access to the instant asset write-off and simplified depreciation pool. See our creative freelancer tax guide for a full breakdown.
Get Expert Help with Film Production Depreciation
Depreciation schedules for film production can be complex, particularly when equipment is shared across multiple productions or when you are structuring costs for a Producer Offset claim. At Count Out Loud, we specialise in accounting for the film and television industry and can help you maximise your deductions while keeping your QAPE calculations clean.
Call us on (02) 9043 1525 to discuss your equipment depreciation strategy, or get started with our Producer Offset Calculator.