To claim a deduction for tools and equipment expenses:
- You must use the items to perform your work duties.
- You must work out if you can claim the cost of the item in the income year you buy it or the decline in value over its effective life.
- You must have a record of your expenses and use of the items.
When you use the items for both private and work purposes, you need to apportion your deduction. You can only claim the work-related use of the item as a deduction.
You can also claim a deduction for the work-related portion of:
- costs you incur to repair and insure your tools and equipment
- interest expenses you incur on money you borrow to buy these items.
What you can't claim
You can't claim a deduction for:
- your use of the tools or equipment for private purposes
- expenses for tools and equipment that someone else supplies for your use.
You can claim the cost of tools and equipment that you use for work, such as:
- hand tools – for example, spanners, hammers and screwdrivers
- power tools – for example, grinders, sanders and hammer drills
- musical instruments
- safety equipment – for example, a hard hat or steel cap boots
- technical instruments
- electric clippers and scissors
- phones and other devices
- computers, laptops and software
- bags and cases
- stationery and office supplies
- office furniture and equipment.
This is not an exhaustive list of items or equipment you use for work.
Tools and equipment are generally depreciating assets that decline in value over time. How you work out your deduction will depend on if the item cost:
You need to apportion your deduction if you use the item for both work and private purposes.
You claim the deduction in your tax return as other work-related expenses. For instructions on how to complete your tax return, see Lodgment options for preparing your tax return.
An immediate deduction is available for items that cost $300 or less, if you use them more than 50% of the time for a work purpose. You must satisfy the conditions of 4 tests to claim an immediate deduction.
You can't claim a deduction for the cost of the item if it is part of a set that cost more than $300, or is identical or substantially identical to similar items that together cost more than $300. In this case you claim a deduction for the decline in value of the items.
Example: tools costing less than $300
Delia is a violinist in an orchestra and requires a new bow for performances. The new bow costs $200. Delia keeps a copy of the receipt, that shows the cost of the bow and where and when she bought it.
Delia only uses this bow for performances with the orchestra.
Delia can claim an immediate deduction for the full cost of the new bow as:
- it cost less than $300
- the bow is required for work-related duties
- the bow is only used for work purposes
- she has records as evidence she incurred the cost.
- cost more than $300
- forms part of a set that together cost more than $300
- is identical, or substantially identical to, other items that together cost more than $300.
Example: decline in value for a set of tools costing more than $300
Sammy is an employee mechanic and needs a spanner set for working on cars.
Each spanner costs $22 and can be bought individually. There are 16 spanners in the set costing a total of $352.
Sammy buys one spanner each fortnight of the income year starting in August.
As the spanners are part of a set costing more than $300 in total, to claim a deduction, Sammy must work out the decline in value of the set.End of example
Calculating your claim
Work out your claim for the decline in value for a depreciating asset using our Depreciation and capital allowances tool.
You can manually calculate the decline in value of a depreciating asset using either the prime cost method or diminishing value method.
You must keep records to support your claim for work use of tools and equipment, such as:
- receipts for items you buy
- evidence that you need to use the items for work purposes
- a diary or similar record that shows how you work out your percentage of work-related use.
If you are claiming the decline in value of an asset, you also need to keep records that show how you calculated decline in value.
For more information on general record keeping requirements and formats, see records you need to keep.Deductions for tools or instruments you use for work, including the cost of repairs and insurance.