Under simplified depreciation rules (including the instant asset write-off rules), the cost of an asset includes both:

• the amount you paid for it, and
• any additional amounts you spent on transporting and installing it ready for use.

This is known as the first element of cost.

The cost also includes amounts you spent on improving or upgrading the asset. This is known as the second element of cost.

If you are entitled to claim a GST credit for GST paid on a depreciating asset or an improvement to a depreciating asset, the amount of the credit you can claim is excluded from the cost of the asset.