Fixed assets are long-term tangible assets used in the daily operation of your business. They are not sold in the normal course of business and typically last more than one year.

At Ozobooks, we help Australian businesses identify, track, and manage fixed assets to ensure accurate reporting, compliance, and tax deductions.

What Are Fixed Assets?

Fixed assets are physical items that your business owns and uses to generate income. They are recorded on the balance sheet and depreciated over time.

Common examples include:

• Vehicles
  
• Office furniture
  
• Machinery and tools
  
• Computers and equipment
  
• Buildings and fit-outs
  

These assets lose value over time (depreciation), and you can claim this as a tax deduction.

Fixed Assets vs Current Assets

Feature	Fixed Assets	Current Assets
Use timeframe	More than 12 months	Less than 12 months
Example	Machinery, computers	Cash, accounts receivable
Accounting	Capitalised + depreciated	Fully expensed or tracked short-term

Example:

You purchase a delivery van for $40,000. It’s classified as a fixed asset and depreciated over 5 years using the diminishing value method. Each year, you claim a portion as a tax deduction.

Why They Matter for Tax & Compliance

• Depreciation on fixed assets reduces taxable income
  
• Correct classification improves accuracy of your balance sheet
  
• ATO requires businesses to track and report depreciating assets properly
  
• Essential for year-end reporting and audits
  

How Ozobooks Helps

• Setting up your asset register
  
• Tracking depreciation and asset life
  
• Advising on tax treatments and thresholds
  
• Syncing assets with your chart of accounts and BAS reporting
  

FAQ:

Q1: Can I expense fixed assets immediately?
Only if they qualify under the instant asset write-off or temporary full expensing rules. Otherwise, you must depreciate over time.

Q2: What if I sell or dispose of a fixed asset?
You may need to adjust your depreciation schedule and declare any capital gain or balancing adjustment.

Q3: Do second-hand items count as fixed assets?
Yes, as long as they are used for business and meet the criteria (useful life, ownership, cost basis).

Q4: What’s the difference between a capital purchase and an expense?
Capital purchases (fixed assets) provide value over multiple years and are depreciated. Expenses are used up within a year and deducted immediately.