How to Claim Your Laptop as a Tax Deduction

If you use your laptop for work purposes then that work usage is tax deductible.

What are the requirements?

You can claim a computer, laptop or tablet as a tax deduction if it is used for "work".  Note that you can only claim the work-related portion of the expense. So how do we do that? The proof required  will be a diary of usage.  If the laptop is used predominantly for work, then no diary is required, but it's always a good idea to be safe, so maybe just knock one out anyway.  You must also have receipts that show you spent your own money on the purchase, and the date that you purchased the item.  You need to nominate the business use percentage.

You also need to keep records of your expenses and use of the item. If you use the laptop for both work and private purposes, you need to apportion your deduction. You can only claim the work-related use of the item as a deduction.

How to calculate your deduction?

How you calculate your deduction depends on how much the laptop cost and how long you use it for. If the laptop cost $300 or less, and you use it more than 50% of the time for work, you can claim an immediate deduction for the full cost. If the laptop cost more than $300, or you use it less than 50% of the time for work, you need to calculate the depreciation of the laptop.  Gotax can work that out for you through their online system.

You can also claim the work-related portion of other costs associated with your laptop, such as repairs, insurance, interest on loans, software and internet fees.

What about ancillary equipment?

If you buy ancillary equipment that goes with your laptop, such as a mouse, keyboard, monitor or printer, you can also claim them as tax deductions. The same rules apply as for laptops: if they cost $300 or less and are used more than 50% for work, you can claim an immediate deduction; otherwise, you need to depreciate them.

How to keep a log or diary?

To substantiate your claim, you need to keep a log or diary of your work-related use of your laptop and ancillary equipment. You can do this by recording:

- The dates and times you used the items for work
- The nature and purpose of your work activities
- The percentage of work use compared to private use

You don't need to keep a log or diary for every day of the year. You can keep a record over a four-week representative period and then apply that percentage to the whole year.

Or better still, download the Gotax Deduction Grabber App.  It has all you need to record or diarise your expenses throughout the year.

An example

You bought a laptop for $1,000 in July 2023 and used it 60% for work and 40% for private purposes. You also bought a monitor for $200 and used it 50% for work and 50% for private purposes. You paid $100 for software and $50 for internet fees that were solely for work use. You kept a log or diary of your work-related use over four weeks.

To calculate your deduction, you need to:

- Find the applicable depreciation rate of your laptop and monitor.  Gotax has those rates. For the example we'll say that the laptop lasts 4 years, so that's a 25% depreciation rate.
- You can calculate the depreciation from multiplying the cost by the percentage of work use and then by the depreciation rate. For example:

    - Laptop: $1,000 x 60% x 25% = $150
    - Monitor: $200 x 50% x 25% = $25

- Add up the depreciation of your laptop and monitor and any other work-related expenses. For example:

    - Laptop + monitor: $150 + $25 = $175
    - Software + internet: $100 + $50 = $150
    - Total deduction: $175 + $150 = $325

You can claim $325 as a tax deduction for your laptop and ancillary equipment in your 2022-23 tax return.

Claiming your laptop as a tax deduction can help you save money with your tax. Just remember to follow the ATO rules and keep records of your expenses and use. If you need help with your tax return, contact your professional tax agent, Gotax. today.