SLM vs WDV Depreciation: Which Method Saves More Tax?
SLM spreads the same depreciation amount every year; WDV front-loads larger deductions early and tapers off later.
Entrepreneurs often pick SLM because it feels “steady,” then panic when peers using WDV pay less tax in year one. The confusion comes from equating accounting neatness with tax savings.
Key Differences
SLM: Fixed yearly charge = (Asset cost – scrap value) ÷ life. WDV: Each year’s deduction = Opening book value × fixed rate. Result: WDV slashes taxable profit faster in early years.
Which One Should You Choose?
Choose WDV if you want immediate cash-flow relief and your business is profitable now. Stick to SLM only if you prefer smooth earnings for investors or lenders.
Does WDV always save more tax?
No, it shifts tax savings to earlier years; total tax over the asset’s life remains identical.
Can I switch from SLM to WDV later?
Yes, with permission from tax authorities and by passing a board resolution.