How Xero calculates pool depreciation

Xero calculates pool depreciation on all assets in the pool as if they were a single asset. The value of the pool is adjusted for assets added or transferred to the pool during the year, and for any pool adjustments in the year. Xero uses the diminishing value depreciation method for pool depreciation.

Depreciable value

The depreciable value of an asset in a pool is the pooled amount you enter when you register the asset, or transfer it into the pool.

Depreciation rate

If you select the Small Business Pool or Low Value Pool, Xero applies default depreciation rates set by the ATO:

  • Small Business Pool - Full rate 30.00%, half rate 15.00%
  • Low Value Pool - Full rate 37.50%, half rate 18.75%

If you set up a custom pool, you can set your own depreciation rate.

Pool balance before depreciation

Xero calculates the pool balance before depreciation as follows:

Opening balance + transferred assets + new assets - disposals + adjustments

Depreciation calculation

Xero calculates the year's pool depreciation when depreciation is run for the last month of the financial year.

If the pool balance before depreciation is 0 or negative, no depreciation will be calculated.
Amount to be depreciatedDepreciation rate
Pool opening balanceFull rate

New assets added to pool

Adjustment for current year addition

Half rate

Existing registered assets transferred to pool

Adjustment for opening balance or business use

Full rate