Computers and laptops used for work, or partly for work, may generally claimed as a tax deduction – the claim adjusted by the percentage of business or work use.
Small businesses: see the $20,000 threshold for accelerated small business depreciation claims (extended to 30 June 2018) and ATO Depreciation.
The current Effective Life estimates for computers under Table B are:
- Computers – effective life of 4 years
Under the depreciation formula, this converts to a Diminishing Value percentage rate of 50% per annum or Prime Cost 25%
- Mobile/Portable Computers (including laptops and tablets) – effective life of 2 years (from 1 July 2016)
Under the depreciation formula, this converts to a Diminishing Value percentage rate of 100% or Prime Cost 50%
Employees – Work-related expenses
Employees can claim their computer costs to the extent that they directly relate to the earning income from their employment.
All non-business taxpayers can claim a full deduction if the computer (or laptop or software) costs no more than $300. Where the cost is more than $300 then the depreciation formula must be used to calculate the percentage tax deductible amount.
Small claims can be included in the $300 minor expenses limit for which written evidence is not required. Otherwise – as is more often the case given the relatively high cost of computers – evidence of expenditure, usually in the form of receipts, and a record of work-related use (such as a diary) will normally be required to support a claim.
Such work-related claims, also encompass deductions for associated expenses such as internet usage, loan interest (on the purchase cost) and repairs.
Computer tax depreciation claims for business and generally
As assets which decline in value over time, claims for computers are dealt with in a number of possible ways, with possible choices available under several depreciation categories.
- You can choose to self-assess the effective life of the computer, which determines what percentage of the cost is claimable under either the Diminishing Value or Prime Cost calculation methods.
- You can alternatively choose to use the Commissioner’s estimate of Effective Life (see above), which is revised and published annually by the Tax Office. The Effective Life in years determines the percentage of cost to claim under either the Diminishing Value or Prime Cost calculation methods.
Small Business Entities – basically those carrying on business with an aggregated business turnover of less than $10 million per annum (this was $2 million before 1 July 2016) – may claim for depreciation as
- an immediate deduction for assets costing less than $1,000 (this limit rising to $6,500 for the period 1 July 2012 to 31 December 2013); or
- up to $20,000 in the period from 7.30pm (AEST) 12 May 2015 until 30 June 2017 (since extended to 30 June 2018 in the 2017-18 budget measures).
- pooling of assets to be depreciated at 15% in the year of acquisition, and 30% ongoing.
- Guide to depreciating assets
- Effective Life conversion calculator
- Tax Commissioner’s Effective Life tables
This page was last modified on 29 June 2017