When are my tools and equipment deductible?

If you are a tradie or a professional who uses tools and equipment for work, then there's a tax deduction in it for you.  You just need to make sure you comply with the rules, and there always rules to follow. 

What are tools and equipment?

Tools and equipment are those items that you use to do your job, they can include:

- Hand tools – for example, spanners, hammers and screwdrivers
- Power tools – for example, grinders, sanders and hammer drills
- Technical instruments – for example, calculators, cameras and musical instruments
- Safety equipment – for example, a hard hat or steel cap boots
- Computers, laptops and software
- Bags and cases
- Stationery and office supplies
- Office furniture and equipment

What are the conditions for a deductible expense?

More Rules needed is you want to claim a deduction for your tools and equipment:

- You must use them in connection with performing your job
- You must work out if you can claim the cost of the item in the income year you buy it or over a few years
- You must have a record of your expenses and use of the items
- If you use the tools and equipment for both work and private purposes, then you need to proportion the work portion. 

You can also claim the work-related portion of:

-  The costs to repair and insure your tools and equipment
-  Any interest on the money you borrowed to buy these items

How much can I claim?

The amount you can claim depends on the cost of the item:

- For items that cost less than $300, you can claim an outright tax deduction for their total cost in the year you buy them
- For items that cost more than $300, you can claim a deduction over the next few years.  This is called depreciation and the rates vary depending on the type of equipment.  Use the Gotax online site , select the equipment type and then it's automatically calculated for you.

What are some examples of deductible expenses for tools and equipment?

Now to test your understand of the written word.  Here are some examples for you to ponder:  

- You buy a drill for $250 and use it 80% of the time for work. You can claim a deduction of $250 x 80% = $200 in the year you buy it
- You buy a laptop for $1500 and use it 60% of the time for work. The effective life of the laptop is 4 years. You can claim a deduction of $1500 x 60% / 4 = $225 per year for 4 years
- You buy a camera for $800 and use it 40% of the time for work. The effective life of the camera is 5 years. You can claim a deduction of $800 x 40% / 5 = $64 per year for 5 years

Now you should have a good idea.

Now head off to gotax.com.au and let the Gotax brain work it all out for you.

And don't forget to record those receipts and transactions with the Gotax Deduction Grabber App.  Never lose a receipts again and never let a tax deduction slip through your fingers.