You can claim a tax deduction for the cost of purchasing tools and equipment that you have used throughout the year to earn your income, and also for the work related use of your home office.
TOOLS & EQUIPMENT
When Tools and Equipment Expenses Are Allowed as Tax Deductions
You can claim the cost of any tools or equipment as a tax deduction:
• If the tools and equipment contributed to your income during the financial year
• If you have demonstrated that they are used for the purposes of work, rather than for private use
• For items that cost less than $300, you can claim a deduction for their total cost
• For items that cost more than $300 (or that are part of a set that together cost more than $300), you can claim a deduction for their decline in value year-on-year (depreciation)
• For repairs and insurance costs related to tools and equipment
• For upgrades to tools and equipment
What You Can Claim as Tool and Equipment Expenses
There are a number of standard items that can often be claimed as a tax offset on your tax return, including:
• Computers and software
• Desks, chairs and lamps
• Filing cabinets and bookshelves
• Hand tools and power tools
• Protective items, such as hard hats and safety glasses
• Professional libraries
• Safety equipment
• Technical instruments
What You Cannot Claim as Tool and Equipment Expenses
Much like all other tax expenses, you cannot claim:
• Any tools or equipment that are not required to earn your income
• The full cost of any tools or equipment that are also used for private purposes. A fair apportionment of the expense between business and personal use needs to be applied and substantiated.
HOME OFFICE EXPENSES
Home Office Tax Deductions
In situations where taxpayers perform some of their work duties from home they may be entitled to claim a deduction for expenses incurred.
As a general rule, expenses associated with your home are of a private or domestic nature and do not qualify as deductions for tax purposes. An exception to this general rule is where part of the home is used for income producing activities and has the character of a ‘place of business’. In such cases some of the occupancy expenses incurred for the home ‑ such as rent, mortgage interest, municipal and water rates, land taxes and house insurance – may be partially deductible.
The following factors, none of which is necessarily conclusive on its own, may indicate whether or not an area set aside has the character of a ‘place of business’:
• the area is clearly identifiable as a place of business
• the area is not readily suitable or adaptable for use for private or domestic purposes in association with the home generally
• the area is used exclusively, or almost exclusively, for carrying on a business, or
• the area is used regularly for client or customer visits.
An example is a salesperson in the country whose city-based employer does not provide an office for them.
