In today’s world, owning a laptop is almost non-negotiable. Most jobs involve some sort of computer use, and if you’re not claiming your laptop or desktop PC, you’re missing out on an important opportunity to reduce your tax bill. So, whether you run your own business, work remotely, or simply need to supply your own computer for work, it’s worth exploring your options. In this article, we’ll take you through the steps involved in claiming a laptop on your tax return, starting with the most obvious question.
Can You Claim a Laptop on Your Tax Return?
When claiming a laptop, you can only claim the work-related portion of the expense. The Australian Taxation Office (ATO) realises that most people will use their laptops privately as well as for work. So, if you try to claim 100%, you’re at risk of being red-flagged for an audit, and no one wants that.
To accurately determine your work-related use, keep a work diary detailing your computer usage for a minimum of 4 weeks. Your diary should include:
- The date
- A short summary of your work tasks
- The time spent on your computer for work and personal use.
You’ll need to keep a log of your activities consecutively, which can then be averaged for the year. If your work-related usage changes, it’s worth starting a fresh diary to ensure your records are accurate.
Pro Tax Tip: If you’re not 100% confident that you can accurately determine your private and work-related use, a professional tax accountant can steer you in the right direction. Find your nearest ITP branch today, and one of our friendly accountants will be happy to help you out.
What Proof Do You Need to Claim a Laptop on Tax?
It’s crucial that you’re able to prove any expenses you incur in relation to a laptop you use for work. So, keep your receipts, tax invoices, contracts, work diaries and communications from your financial institutions. The ATO wants to see certain information on your proof of purchase. So make sure it shows the supplier’s name, the cost of your laptop, the date you bought your laptop, and a description of your purchase. If your record-keeping skills could use some work, check out our comprehensive guide to keeping tax records and maximising your deductions.
Pro Tax Tip: If you’re a freelancer or business owner earning less than $5 billion in aggregated turnover per year, you can claim an immediate deduction for most assets purchased between 6 October 2020 and 30 June 2023. Businesses with a turnover of more than $50 million but less than $5 billion can claim new assets only. From 1 July 2023, businesses with a turnover of less than $500 million will be able to claim a full deduction under the ATO’s Asset Write-Off provisions, but this is limited to assets with a value of less than $1,000.
Should You Claim a Deduction or Depreciation for Your Laptop?
To deduct or depreciate? That is the question. The answer depends on the cost of your purchase and whether you are an employee or a business owner. As an employee, if your laptop cost $300 or less, you can claim an immediate deduction in the year in which you bought the item. If your laptop cost over $300, and most of them will, then you’ll need to depreciate the laptop over 2 years.
Pro Tax Tip: The ATO states that the life of a laptop is 2 years, and a desktop computer is 4 years. Tablets and iPads can be depreciated over 2 years.
If you hire or lease your laptop, the work-related part of the fee can be claimed in the same year as a running cost, and not a capital purchase.
Pro Tax Tip: To claim a laptop as a work-related expense, you must have a genuine requirement to use it for work.
Can You Claim Other Electronic Items as Tax Deductions?
It’s not just laptops that can be claimed on your tax return. Items such as desktop computers, modems, monitors, tablets, mobile phones and printers can be claimed. These items are considered capital purchases and may need to be depreciated over a set time, which the ATO determines.
Of course, there are also running costs that these items will incur. Some of the most common running costs for computers include:
- Internet fees
- Repair and maintenance of equipment
- Hosting fees
- Cloud storage
- Consumables such as ink and paper
- Costs related to setting up and maintaining your computer
Pro Tax Tip: You can only claim a tax deduction if you incurred the cost and no one has reimbursed you for it.
In 2023, the ATO confirmed they are continuing their crackdown on record-keeping and work-related expenses. So now more than ever, it pays to know exactly what you can claim and how much is work-related. This is the best way to avoid triggering an ATO audit. Tax experience is a huge advantage when it comes to deducting all eligible costs and maximising your tax return. To gain instant access to the expertise you need, phone 1800 376 487 and chat with a friendly ITP accountant. We’ve also made it easy for you to find your nearest branch and book an appointment online.