SLM vs. WDV Depreciation: Which Method Saves More Tax?
SLM spreads cost evenly; WDV front-loads it using a fixed rate on the falling book value each year. Both shrink taxable profit, just at different speeds.
Accountants pick SLM for steady assets like buildings, WDV for tech that loses value fast; the confusion comes when they chase early tax relief yet forget cash-flow timing.
Key Differences
SLM grants identical annual deductions; WDV starts high then tapers. SLM yields predictable tax each year, WDV gives bigger upfront shields, smaller later.
Which One Should You Choose?
Choose WDV if you want immediate cash savings and reinvest quickly. Stick to SLM when stable deductions suit long-term budgets or lenders’ covenants.
Can I switch later?
Yes, with permission from tax authorities; recalculations apply and may trigger catch-up tax.
Does higher first-year WDV always mean lower total tax?
No, it only shifts timing; total tax over the asset’s life remains equal if rates don’t change.