At the end of the financial year, when it’s time to submit your Tax Return, it can be both confusing and overwhelming. Knowing what to deduct, how much to deduct, and when to do it isn’t as easy as it first looks. But fear not! If you’re wondering if you can claim your laptop, computer, or tablet as small business tax deductions, or if you can deduct them as an individual, you’ve come to the right place.
In this article, we will guide you through tax deductions for when you buy a computer, so you can make sure you are getting the most out of your laptop for business and personal use.
What is a tax deduction?
A tax deduction is something that you have paid for, out of your own pocket, for a work related reason. When you claim a tax deduction, it helps lower your taxable income. If you lower your taxable income, you don’t have to pay as much tax which means you can spend more money on the things you love. The best way to do this is by lodging your tax return online with a professional tax agent.
When it comes down to it, there are three main criteria that qualifies an expense for tax deduction:
- You must have spent the money and not have been reimbursed
- It must be related to your job
- You must have a record to prove it
What is your taxable income?
Your taxable income is money generated from your employer or your work. Your taxable income also includes:
- PAYG summaries
- Pensions and government allowances
- Interest earned (banks etc)
- Rental property income
- Business income
- Other income earned (capital gains etc)
How do I claim a computer or laptop as a tax deduction?
You can claim a computer, laptop or tablet as a tax deduction if it is for “business use”. To prove this, you must have:
- Proof that you spent your own money on the purchase
- The date that you purchased the item
- The business use percentage
How do you calculate your business use percentage?
You might be thinking, “what percentage of tax do I pay on my computer?” Calculating the business use vs personal use of your computer is similar to the logbook method of tax deduction for your car. What you do is:
- Make a diary
- Note down all of the business use of your computer over 4 weeks
- Note down all of your personal use of your computer over 4 weeks
- The percentage of business use to personal use from the 4 weeks can be averaged out over the year
Can you claim a one off tax deduction?
You can claim a one off tax deduction if the cost of the computer, laptop or tablet was less than $300. If it is under $300, or if any of the software you used was under $300, you can immediately claim the business use percentage as a deduction.
How does depreciation work for laptops and computers?
If your purchase was more than $300, you can claim depreciation expense. Computer and laptop depreciation rate in Australia is calculated by the computer and laptop effective life, which is four and two years respectively. To work out how much depreciation you can claim, you can book a meeting with a professional.
What if you rent your computer or laptop?
Computer rental or laptop rental are debatably easier to calculate your tax deductions for. Simply record how much of the laptop hire is your business use percentage and apply that to your monthly fee.
Can you claim an iPad on tax?
If you buy something and you use it for work, such as an iPad, you absolutely can claim it as a tax deduction. To claim an iPad or tablet as a tax deduction, the same method is used as is mentioned above.
Make sure you can prove it
If you are claiming a work PC or laptop, you have to have a legitimate reason for needing it for work. For example, if you are a waiter, it will be difficult to prove that you need a PC in your home, since you can’t wait tables from the PC at home. However, if you have a legitimate work reason for needing a home office, then you can justify the purpose.
So, what else can you claim on your Tax Return? The best way to claim as much as you possibly can, and not miss out on anything is with a tax service like One Click Life.
The more you deduct, the less tax you pay and the more money you can spend on yourself. We are with you every step of the way, so you don’t have to face the ATO alone. Talk to our friendly, trusted tax accountants about which tax deductibles you can claim and boost your tax refund, stress-free.
You can also claim your tax agent/tax return fee back on tax, so why wouldn’t you use one to minimise your tax and maximise your money?
One Click Life fast offers online tax returns at your fingertips in an easy-to-use platform run by industry professionals.
Taxes, health insurance, and Wills can be time-consuming and tedious. Our app allows you to be able to do this fuss-free, giving you a simple way to organise, track and manage all of your Life Admin in one place.
Let One Click Life take care of your Tax Return and life’s essential tasks so you can spend more time doing the things you love.