A recent analysis by the Australian Bureau of Statistics reveals that almost a third of all employed Australians regularly worked from home. With technology dramatically improving, businesses and employees have a lot more freedom to work remotely without affecting productivity or performance. If you spend a portion of your week working remotely and use your own computer or laptop for this purpose, it is likely you could claim part of the cost of that computer as a tax deduction.

Each year, the ATO sets its sights on higher-than-expected tax deductions and while overclaiming may be accidental, it can still cost you. This year, the ATO will be closely monitoring work-related expenses including cars, travel, clothing, internet and mobile phones as well as equipment like computers. To avoid any unnecessary penalties, always check before you claim a deduction. Here are a few tips to point you in the right direction:

Claiming as an individual

If you’re employed, required to work from home and have recently bought a personal computer, you may be able to claim the value of your computer as a year-by-year depreciation. In saying that, you must genuinely use the computer for work. If you use the computer for both work and private purposes, you can only claim a percentage based on the work-related portion of usage. If you paid for your computer and your employer reimbursed you, you are not eligible to claim a deduction on it.

It’s not just about employees working from home, freelancers who need to purchase equipment such as computers or laptops to do their job may also be entitled to claim some of the cost in their annual tax return. Individuals studying may be eligible to claim some of the cost of a laptop or computer if the self-education directly relates to their current work. There are rules and regulations around all scenarios so before you make any assumptions, always talk to a tax professional to make sure you’re not over claiming or underclaiming.

Claiming as a small business

If you run a small business (a business with a turnover of less than $10 million), you can claim an immediate tax deduction for any assets costing less than $20,000. Unless you’re buying a supercomputer, you’ll likely be eligible for an immediate tax deduction on any laptops or desktops purchased for business use.

If the computer or laptop is only used partly for business purposes, you can only claim a deduction for the business portion of the cost. To do this, you will need to keep a diary over a period of four weeks to establish a pattern of uses. From there, your accountant or tax professional can help you apportion the correct amount and let you know what records you need to keep to substantiate your claim. In addition to the cost of your computer, as a small business owner, you can also claim your internet costs and expenses relating to setting up and maintaining your computer.

How do I claim depreciation?

Both small businesses and individuals may also be able to claim depreciation on the computer. Generally speaking, desktop computers depreciate over a period of four years and laptops depreciate over two years. If your computer cost less than $300, you can claim an immediate deduction for the full cost of the item. If your computer cost more than $300, you can claim the depreciation over the life of the equipment. Your tax professional can help you work out the rate of depreciation you can claim over the life of the asset.

With the ATO announcing a big crackdown on higher-than-expected tax deductions, now is a good time to consider what you can and can’t claim. Taking everything into consideration, experience counts when it comes to getting the most out of your tax return. Don’t leave your deductions to chance, find your nearest H&R Block office to talk to an experienced tax professional today.

Book a tax return appointment

Let us lodge your tax return for you. Our tax accountants have the knowledge to walk you through the tax refund process with ease. We are committed to offering expert and personal service year-round at a location convenient to you.

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Book a tax return appointment

Let us lodge your tax return for you. Our tax accountants have the knowledge to walk you through the tax refund process with ease. We are committed to offering expert and personal service year-round at a location convenient to you.

Book now