1. Home
  2. »
  3. Tax Deductions
  4. »
  5. ATO Depreciation
  6. »
  7. Depreciation of Computers

Depreciation of Computers

Computers and laptops used for work, or partly for work, may generally claimed as a tax deduction, with the claim adjusted to include the percentage of business or work use.

Using the Tax Office’s determined rates, the deductible cost of a computer can be claimed over 4 years; laptops and tablets over 2 years. Anything under $300 for work-related non business use is also claimable in the year of purchase. For small businesses, the instant asset deduction rules may also provide a full deduction in the first year.

Computers 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%

The diminishing value and prime cost calculation methods are explained here.

Attention Small Businesses: See the more generous instant asset deductions currently available under temporary measures for accelerated business depreciation claims and ATO Depreciation.

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, laptop or tablet 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.

There are 4 pre-conditions on the under-$300 full claim allowance:

  1. the cost is less than $300
  2. the asset is used for non-business purposes, e.g. as an employee
  3. the asset is not part of a set costing more than $300
  4. the asset isn’t one of a number of identical or substantially identical assets that together cost more than $300

See more information about this claim method here (including examples of sets and substantially similar items).

Small claims can also 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.

Choices include:

  • 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.

Further information:

  1. Guide to depreciating assets
  2. Effective Life conversion calculator
  3. Tax Commissioner’s Effective Life tables
  4. Small business instant asset deductions (temporary full expensing)

This page was last modified on 2021-08-23.