There are plenty of incentives baked into the tax code for business and individuals — to both assist with the day-to-day and invest in new gear. While it may not always make sense to claim a deduction, doing so can be a big help if you need some new tech.
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A deduction allows you to reduce your taxable income when filing your tax return.
Generally they are related to expenses incurred while you are earning your income — whether an individual or a business.
Some deductions may help you free up some extra cash to spend on new gadgets. Others will let you directly claim back what you’ve spent on new items, allowing you to arm up for the next big purchase. Either way, these are some of the deductions that can help you gear up heading into a new financial year.
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Deduct revenue expenses
Most expenses occurred in running a business can be deducted from your tax bill, provided they are related to actually earning an income, and depending on the size and type of company you’re operating. The Australian Tax Office has a list of expenses you can claim in the year they are incurred — things like rent, stationary, salaries and fees. These are called revenue expenses, and are generally the costs related to the everyday running of your business.
Deduct capital expenses
For items that last longer but also have a limited life — think computers, electrical tools and cars and other gear valued over $1000, you have to depreciate them over a number of years — claiming back a small portion of their value over their lifetimes. You can generally figure out the “lifetime” of an asset yourself — taking into account how long the asset will contribute to your business, given reasonable wear and tear and maintenance. The ATO also has a handy page of formulas and an online calculator to help you figure out how long your asset will last and how much you can deduct per year.
Deduct home office expenses
If you’re business operates out of your home, or you work from home, there are other deductions you can take to invest back in gear. Running expenses like electricity and cleaning, the decline in value of fittings and carpet, and even the room itself can all be claimed on your tax. So can assets like computers, printers, software and routers — they can be deducted immediately if they’re worth less than $300, otherwise you need to work out how much you can depreciate just like a normal capital expense. If you use these items for work and pleasure, you may need to keep a diary of your useage — if 40% of your laptop time is for work then you can only claim 40% of the depreciation of your computer. Again, the ATO website has all the formulas and calculators you might need to work out what you can claim.
Use the small business instant write-off scheme if you can
But you may not have to wait years to recoup the money you spend on your new computer or printer. In a bid to spur investment in the economy, the government last year created an instant writeoff scheme for small businesses with less than $2 million in revenue. Eligible businesses can claim back the purchases of new assets like computers and other tech on their next tax bill, rather than depreciating them over a number of years. We posted this infographic last year to show you who and what is eligible. This year’s budget extended it for another year, meaning from the 1st of July this year businesses with up to $10 million can partake in the scheme.