Tax Deduction for Tools, Equipment and other assets?
Tax Return - Tax Deduction for Tools, Equipment and other assets?

Tax Deduction for Tools, Equipment and other assets?

Published on January 1, 2018
Sam Inayat - Bookkeeping, Tax return and BAS expert

Senior Accountant at Top Accountants

If I am required to use my own tools and equipment at work, can I claim them as tax deduction? The answer is “YES” only ifbuy tools, equipment or other assets to help earn your income.

In this article we will cover following computer tax deduction questions:

  1. How do I claim tools or equipment as a tax deduction?
  2. Can I claim a one off tax deduction or do you need to claim it as depreciation?
  3. What if I have hired/leased tool, equipment or assets?
  4. How can you prove it?
  5. List of tools, equipment or assets which can be claimed as a tax deduction?

1. How do I claim tools or equipment as a tax deduction?

The most important thing to note here is that you are only eligible to claim a ‘business use percentage’ of your tools and equipment or assets as a tax deduction. To begin with, you need the following records:

  1. 1 Proof of purchase for the tools, equipment or assets
  2. 2 The purchase date
  3. 3 The business use percentage
  4. 4 Working out your business use percentage (work purpose usage)

2. Can I claim a one off tax deduction or do you need to claim it as depreciation?

The answer to question depends on the price of tools or equipment.

If item cost under $300, you can claim a one-off, immediate tax deduction for the business use percentage of the purchase price.

Ifitem more than $300, you can claim the depreciation of your computer over the life of the equipment which is 4 years as per ATO guidelines.

3. What if I have hired/leased tools or equipment?

You can still claim a tax deduction even if you lease or pay a monthly fee for your tools or equipment. Claim the business portion of the lease payments on your tax return.

4. How can you prove tools or equipment tax deduction?

First you need list of record listed on question 1 plus you need to have a genuine reason to use your tools or equipment for work and it must be a requirement of your job. Note, ATO can request further clarification, in that case you will be required to prove that personal tools or equipment use is a requirement of your job.

5. List of tools, equipment or assets which can be claimed as a tax deduction?

You can also claim the cost of repairing and insuring your tools and equipment and any interest on money you borrowed to purchase these items.