How to Claim Tools & Equipment

How to Claim Expenses for Tools and Equipment Used for Work

Claiming tax expenses for tools and equipment that you've used for work and you're not quite sure how?

Index

1. What Can You Claim?
2. A Couple of ways to Claim
3. What is Depreciation
4. Example 1: The Carpenter
5. Example 2: The Office Worker
6. Keeping Records
7. Maximise Your Tax Deductions
8. The End

What Can You Claim?

You can claim expenses for tools and equipment that you need for you to do your job. This includes items like:

• Hand tools (e.g., hammers, screwdrivers)
• Power tools (e.g., drills, saws)
• Office equipment (e.g., computers, printers)
• Safety gear (e.g., helmets, gloves)

Obviously these tools and equipment must be used for your work and not for personal use.  If some are used for both you should diarise the useage for a month and apportion accordingly.

A Couple of ways to Claim

Two ways to claim these Tax Deductions:

1. Immediate Deduction: If the cost of the tool or equipment is $300 or less, you can claim an immediate deduction for the full cost in the year you purchased it.
2. Depreciation: If the individual  item costs more than $300, you'll need to claim the expense over several years, this is called depreciation.

What is Depreciation?

Depreciation is a way to spread the cost of an asset over its useful life. For tax purposes, this means you can claim a portion of the asset's cost each year as an income tax deduction. The Tax Office publishes rates of depreciation for different types of tools and equipment. Use the Gotax.com.au website when you claim depreciation and the rates will automatically be determined for you.

Example 1: The Carpenter

Consider a carpenter who recently bought a new power drill for $250 and a set of high-quality saws for $450. Here's how you can claim these expenses:

• Power Drill ($250): Since the drill costs less than $300, you can claim the full $250 as an immediate deduction in the year you bought it.
• Saws ($450): Because the saws cost more than $300, you'll need to depreciate this expense over its useful life. Suppose the useful life is 5 years; you can claim $90 each year for 5 years.

Example 2: The Office Worker

As an office worker you purchased a new laptop for $1,200 to help you work from home more efficiently.

• Laptop ($1,200): Since the laptop costs more than $300, you'll need to depreciate it. If the useful life of the laptop is 3 years, you can claim $400 each year for 3 years.

Keeping Records

Always keep your receipts and a detailed record of your purchases for tax time. The ATO requires you to have proof of the expenses you are claiming as a tax deduction, so make sure to store your tax deductible receeipts safely. Using an app like Deduction Grabber can help you track all your expenses throughout the year, making it easier to maximise your income tax deductions. Scan the QR code now:

Maximise Your Tax Deductions

When it comes time to do your Income Tax Return, ensuring that you've claimed all possible deductions can help you get the maximum refund. For the best experience, consider getting your tax return done online at GoTax Online. They offer a seamless and efficient way to handle your taxes, ensuring you maximise your tax deductions and get the best possible outcome.

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The End

Claiming expenses for tools and equipment isn't that hard once you understand the basics.  Just remember to check the cost, choose the right method (immediate deduction or depreciation), and keep your records safe.

If you're ever in doubt, it's a good idea to consult with a Gotax Accountant.

Start now: GoTax Online