When millions of Australians were forced to work from home at the beginning of this year, many rushed out to buy the items needed to carry out their jobs remotely, including laptops. With tax time lurking just around the corner, it’s time to start thinking about what can and can’t be claimed in 2020.
Laptops are expensive items, so any help we can get in paying for them certainly goes a long way. While the global pandemic has profoundly changed the way we live and work, the way we make tax claims is more or less the same, save for a new flat rate that we’ll dive into a little further down.
Here’s what you need to keep in mind.
Keep records
There are a couple of things you’ll need to keep in order to claim a laptop as a work expense. The first and most obvious is the receipt for the item as proof as purchase as well as the date it was purchased.
The second and slightly less obvious thing you’ll need to keep is a record of its work use over the course of four weeks. It doesn’t need to be detailed, it just needs to note the day’s date, the time you started using the laptop for work, the activities you did for said work and when you stopped, factoring in any break times.
“You can only claim for the work-related use of the laptop so if you also use it privately, you’ll need to apportion your claim,” H&R Block’s Director of Tax Communications, Mark Chapman told Gizmodo Australia. “For instance, if you use the laptop 50% for work and 50% for private use, you can only claim 50% of the cost.”
It doesn’t matter whether you keep track of this physically or digitally, you just want to be able to work out how much of its use is for work, which is the proportion you’ll be able to claim back on your tax return. Once you’ve worked out what that proportion is over four weeks, you should be able to estimate its work use over the time you’ve had it.
Of course, you can only claim the costs you bore yourself. “You can’t claim a deduction if you are reimbursed by your employer,” Chapman said.
Know which type of claim is best for you
There are different ways to claim work expenses. To make an outright claim for the full costs, the item in question needs to be under $300, which automatically rules out the majority of laptops.
“If the cost of the laptop or tablet is $300 or more, you need to claim the cost over two years, which is the effective life set for laptops and tablets by the ATO,” Chapman said. “In the first year, you can only claim for the period you owned the laptop – the later in the financial year you purchased it, the smaller the claim in year one.”
If you run a business, however, things are a little different. “You can claim a deduction in the year of purchase for the whole cost of assets acquired up to $150,000 per asset (from 12 March 2020 to 30 June 2020, $30,000 before 12 March 2020). That should be more than enough to write off the cost of even the best laptop,” Chapman said.
He also says you can also claim other tech costs like work-related software purchased for the laptop, repairs and maintenance, a work-related portion of home internet if working from home, a work-related portion of utility bills if working from home and consumables like printer paper and ink, cleaning materials, etc.
Because of the current state of things, Chapman also mentioned the ATO’s new “shortcut method” for those working from home, allowing them to claim a rate of 80 cents per work hour from March 1, 2020, through to June 30, 2020, with the possibility of extending this period based on how things pan out moving forward.
“You will need to keep a record of the number of hours you have worked from home,” he said. “If you use the 80 cents per hour method, you can make no other claims in relation to working from home. So, items like mobile phone and internet usage are included in the 80 cent rate.’
Another option is claiming the pre-pandemic flat rate, which will allow you to also claim extra costs such as internet and mobile phone usage.
“Alternatively, you can claim the ATO’s existing flat-rate allowance for working from home of 52 cents per hour. This covers the extra costs of heating, cooling, lighting and the decline in value of furniture. All you need to do to claim this is to keep a diary – note the time you start work each day, the time you finish work each day and any breaks. You can then claim 52 cents per hour for each working hour.”
Don’t claim anything you can’t prove
It’s all well and good to buy a slick new laptop and just say you use it for work purposes, but if the ATO smells something fishy in your claim, the onus is ultimately on you to prove that it’s legitimate. If you do get caught out, you could face some fairly gnarly criminal charges and fines, so it’s not at all worth the risk.
If you’re unsure about how or what exactly you can claim, Chapman suggests seeking help. “Tax law is complex and many people either don’t claim for things they could have claimed for or claim for things they are not entitled to,” he said.
“Home-office claims, in particular, are routinely scrutinised by the ATO and with three different ways of making claims, a tax agent can guide you to the best result.”
If you’re looking to pick up a powerful laptop for work and/or play Nvidia’s RTX Studio products pack “vivid colour displays and blazing-fast memory and storage, all precision-engineered into fully-capable laptops”. While they’re perfect for creatives, they’ll most certainly suit anyone who appreciates lightning-fast computing. Whichever laptop you choose, be sure to claim what you can the right way.
Disclaimer: This article contains general information only and is not intended to be used as personal advice.