Computer and laptop expenses
You can claim a deduction for the work-related portion of the:
- decline in value (depreciation) of computers, laptops, printers, software and server routers
- cost of repairs to your computer
- interest on money borrowed to finance the cost of the computer
- cost of internet access.
You cannot claim any deduction for decline in value (depreciation) of items used in your employment if they were provided to you by your employer.
If the computer, laptop or software cost more than $300, you must depreciate the asset via the decline in value process.
For computers, laptops and other equipment, there are two methods to work out depreciation:
- the prime cost method
- the diminishing value method.
Depreciation using the prime cost method is worked out as a percentage of the cost of the equipment. Depreciation using the diminishing value method is worked out initially as a percentage of the equipment's cost and then as a percentage of the written down value.
As a general rule, desktop computers are depreciated over a period of four years, and laptops can be depreciated over three years. You can claim an immediate deduction for the full cost of the item if it costs $300 or less.
If software is purchased as part of a computer system, the total cost of the system is depreciable. If software is purchased separately and costs more than $300, the decline in value (depreciation) is worked out using the prime cost method over a period of four years.
You must apportion the amount of your claim if the computer, laptop or internet has been used in part for private purposes. You need to keep a diary to record the amount of time you use your home computer and internet for work and private purposes. The diary must include a representative period of at least four weeks to establish a pattern of use for the whole year.
Example 11: Claiming computer expenses
Brendan uses his computer and personal internet account at home for work purposes. Brendan records all his computer and internet use in a diary for a representative four weeks, which shows he uses his computer and the internet:
- 40% for work purposes
- 60% for private purposes.
Example 12: Claiming depreciating computer expenses
Kelly purchased her computer on 5 September for $3,000 and has worked out that she uses it 40% for work purposes. Kelly looks up the Effective life of depreciating assets that says the effective life of a computer is four years. She then uses the prime cost method to work out the decline in value of her computer:
asset's cost
|
X
|
days held
365
|
X
|
100%
effective
life of tool
|
X
|
work-use percentage
|
$3,000
|
X
|
300
(5 Sep-30 Jun)
365
|
X
|
100%
4 years
|
X
|
40%
|
Therefore, Kelly claims $247 for the decline in value of her computer in the first year.
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A depreciating asset (such as a computer) is an asset that has a limited effective life and can reasonably be expected to decline in value over the time you use it.
If you purchase a computer that cost more than $300, you can only claim a deduction for its decline in value.
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Last Modified: Tuesday, 21 May 2013