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  • Tools, equipment and other assets

    If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost.

    If the tools are used for both work and private purposes you will need to apportion the amount you claim. If you have a computer that is used for private purposes for half of the time you can only deduct 50% of the cost.

    The type of deduction you claim depends on the cost of the asset:

    • for items that don't form part of a set and cost $300 or less, or form part of a set that together cost $300 or less, you can claim an immediate deduction for their cost
    • for items that cost more than $300, or that form part of a set that together cost more than $300, you can claim a deduction for their decline in value.

    Examples of tools, equipment or assets:

    • calculators
    • computers and software
    • desks, chairs and lamps
    • filing cabinets and bookshelves
    • hand tools or power tools
    • protective items, such as hard hats, safety glasses, sunglasses, sunscreens and cosmetics containing sun protection
    • professional libraries
    • safety equipment
    • technical instruments.

    You can also claim the cost of repairing and insuring your tools and equipment and any interest on money you borrowed to purchase these items.

    If you use items for both personal and work-related purposes you need to keep records, such as a diary, so that, if requested, you can show how you apportioned the amount of private use and work-related use.

    Cosmetics containing sun protection

    Personal items can perform more than one function, and so can have more than one 'use'. For example, some creams and cosmetics can function both as a sun protection feature and as a cosmetic. This would be an example of multiple forms of potential function or use.

    You can claim a deduction for the cost of a specific cosmetic that includes sun protection, if the cosmetic is worn at specific times when your work requires you to perform your duties in the sun.

    You cannot claim a deduction for a cosmetic with sun protection if your work does not require you to perform your duties in the sun. The cosmetic would be a private expense that is not required for your work activity.

    Example 1 – Allowable deduction

    Jackie is a teacher and has bought a cosmetic with high level sunblock. It is not used as a cosmetic on a daily basis as long term use irritates Jackie's skin. However, Jackie finds occasional use is fine and uses it on weekly sport afternoons as a sunblock. The cosmetic is used for the purposes of producing assessable income and a deduction is allowable.

    End of example

     

    Example 2 – No deduction is allowable

    Teegan is a hospitality worker and works at night at a restaurant. She has bought a cosmetic with a high level sunblock. The cosmetic was bought to wear at all times and the sun protection was not the primary purpose for purchasing the product. Teegan wears the cosmetic to her job, but the sun protection is not required in order to produce her income. Teegan is not able to claim a deduction for the cosmetic.

    End of example

    Handbags, briefcases and satchels

    When you purchase a handbag, briefcase or satchel to carry items for work purposes, such as laptops, tables, work papers or diaries, you may be entitled to a deduction to the extent that the bag is used for work purposes. If the bag is used for predominantly personal purposes, such as carrying your lunch and beauty and hygiene products then the purpose is private and you cannot claim a deduction.

    Where you use the bag for both private and income producing purposes, you may need to apportion the deduction you claim based on the amount of time the bag is used for work and for private purposes.

    Where the bag is used for work purposes and costs less than $300, you can claim the deduction immediately. Where the bag costs more than $300, you will generally work out any deduction using its effective life.

    Example 1 – Allowable deduction

    Elizabeth buys a handbag for $150 to carry her tablet and work diary. The handbag is only used to carry the work items and she carries an additional bag for her personal items. She does not use the handbag that carries her tablet outside of work hours. As the bag is being used for the production of assessable income, Elizabeth can claim a deduction.

    End of example

     

    Example 2 – No deduction is allowable

    Arki buys a messenger satchel for $220 to carry his lunch and snacks, personal medical kit and private grooming items, as well as a mini tablet, which he uses in his income producing occupation. He also carries the satchel outside of work hours so the satchel is not predominantly used for the purposes of producing assessable income. Arki is not able to claim a deduction for the satchel.

    End of example

     

    Example 3 – Apportioned deduction

    Theresa buys a large handbag for $280 to replace her current handbag, as she now regularly takes a small laptop type item and client paperwork to and from work. She continues to use her handbag to carry personal items and takes it with her outside of work hours. The large handbag is being used for both income producing and private purposes so the deduction would need to be apportioned between both uses.

    End of example

     

    Media: Transporting bulky tools and equipment
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubx7d1ys (Duration: 00:50)

    See also:

    Last modified: 02 Aug 2018QC 31938