# Tax deduction for laptop?



## airpoe (4 October 2009)

I need some help regarding this, having finally done most of my tax return this is yet to be done.

So I got a laptop last year for $1800 & use if 50% of the time for share trading.

I say it has 3 years "life"

so does this mean I can claim a tax deduction $300 a year for 3 years?
(1800 / 2 = 900 /3 = $300)

Any response would be appreciated


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## Garpal Gumnut (4 October 2009)

*Re: tax deduction for laptop*



airpoe said:


> I need some help regarding this, having finally done most of my tax return this is yet to be done.
> 
> So I got a laptop last year for $1800 & use if 50% of the time for share trading.
> 
> ...




It depends.

gg


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## RamonR (4 October 2009)

*Re: tax deduction for laptop*

Didn't get all the details but my accountant depreciated the value of the laptop by 35% the first year I claimed for it.

so I would *guess* that you could claim 35% of the $900.


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## airpoe (4 October 2009)

i'll will ring the tax office tomorrow if they are open?

But I read it like 37.5% then 18.75% and so on but using this method I wont get the full amount?


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## kam75 (4 October 2009)

airpoe said:


> I need some help regarding this, having finally done most of my tax return this is yet to be done.
> 
> So I got a laptop last year for $1800 & use if 50% of the time for share trading.
> 
> ...




Yeah man, half the cost of the laptop depreciated over 3 years.  But I'd talk to the ATO or your tax agent.


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## stocksontheblock (4 October 2009)

airpoe said:


> i'll will ring the tax office tomorrow if they are open?
> 
> But I read it like 37.5% then 18.75% and so on but using this method I wont get the full amount?




You can only claim the deduction if your job/business is that of a share trader. If you trade shares at home as a hobby/way of make additional money then your laptop is not a deduction.

However, as you have said you would, I would check with the ATO.

The other question I would ask you is how have you deemed - if you can claim a deduction - that you use it for 50% of the time, and not 10%? As the ATO will most certainly ask you to justify the 50% claim.


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## surfingman (4 October 2009)

stocksontheblock said:


> You can only claim the deduction if your job/business is that of a share trader. If you trade shares at home as a hobby/way of make additional money then your laptop is not a deduction.
> 
> However, as you have said you would, I would check with the ATO.
> 
> The other question I would ask you is how have you deemed - if you can claim a deduction - that you use it for 50% of the time, and not 10%? As the ATO will most certainly ask you to justify the 50% claim.




Can you show me a tax ruling to back up this statement of having to be a trader?

A laptop can be depreciated over 3 years.
http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR20084/NAT/ATO/00001&PiT=20080625000001

As for having to be a share trader that's bull****!! As a hobby if you want to try argue share trading is a hobby and not assessable income then good luck with that but that's another issue.

If you have proof you have been buying or selling shares or have dividends coming in you are in your rights to be claiming a deduction for the laptop and internet connection, you should keep a log book for a month to apportion your usage for business / private to save any arguments.

Also calling the ATO is pretty useless 99% of the time they have no idea, do your own research on the ATO's website or call a decent Accountant.


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## stocksontheblock (4 October 2009)

surfingman said:


> Can you show me a tax ruling to back up this statement of having to be a trader?
> 
> A laptop can be depreciated over 3 years.
> http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR20084/NAT/ATO/00001&PiT=20080625000001
> ...




I'm not going to waste my time explaining how the tax system works. However, should you think your position is correct - which it isn’t, then by all means continue to claim the illegal deductions. Furthermore, call the ATO, give them your name, address, Tax file number, tell them what you’re doing, and hope you enjoy the audit.

I will add, just because you may claim it, doesn’t mean you can claim it. The question, I assume, was asked from a point of view on what they should do within the law. That’s the answer the poster got.


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## ShareGuy (4 October 2009)

RamonR said:


> Didn't get all the details but my accountant depreciated the value of the laptop by 35% the first year I claimed for it.
> 
> so I would *guess* that you could claim 35% of the $900.




If your accountant only claimed 35% i suggest you get a new one



airpoe said:


> I need some help regarding this, having finally done most of my tax return this is yet to be done.
> 
> So I got a laptop last year for $1800 & use if 50% of the time for share trading.
> 
> ...




Use should used the diminishing value method rather than the striaght line method you have calculated.

Hence,
200 divided by 3 years life = 66.67%

Thats what you can claim in the first year these days.

2nd yr 
Purchase price - depreciation in first yr x 66.67% and so on.

Laptop depreciation is very generous these days

(Be sure to half the dep calculated each yr for private use in ur case)


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## rock86 (4 October 2009)

Simple.

YES, you can claim it as a deduction (even if you are an investor and not a trader). But as you have put, you can only claim 50% of the depreciation as that is the % you use for investing (this % being justified).

Just a little note, is that you do not need to be a share trader but can be an investor for long term/capital gains, and claim deductions for investing against your assessable income.

Cheers


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## ShareGuy (4 October 2009)

stocksontheblock said:


> I'm not going to waste my time explaining how the tax system works. However, should you think your position is correct - which it isn’t, then by all means continue to claim the illegal deductions. Furthermore, call the ATO, give them your name, address, Tax file number, tell them what you’re doing, and hope you enjoy the audit.
> 
> I will add, just because you may claim it, doesn’t mean you can claim it. The question, I assume, was asked from a point of view on what they should do within the law. That’s the answer the poster got.




If you have interest and dividend income just claim it at D7.

If you want to claim trading as a business shedule in ur tax return just make sure you write out a "business plan" and don't make consistent losses and you'll be ok.


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## surfingman (4 October 2009)

stocksontheblock said:


> I'm not going to waste my time explaining how the tax system works. However, should you think your position is correct - which it isn’t, then by all means continue to claim the illegal deductions. Furthermore, call the ATO, give them your name, address, Tax file number, tell them what you’re doing, and hope you enjoy the audit.
> 
> I will add, just because you may claim it, doesn’t mean you can claim it. The question, I assume, was asked from a point of view on what they should do within the law. That’s the answer the poster got.




I would really enjoy you telling me how the tax system works, Investors can claim deductions relating directly to their Investment (be it depreciate or deduct) and there isn't a decent Accountant in Australia that would argue against this....

This argument is pointless....


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## airpoe (4 October 2009)

thanks for all the advice.

I am claiming it in D7, also claiming 1/2 of my internet fee which is alot more straight forward.


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## ShareGuy (4 October 2009)

surfingman said:


> I would really enjoy you telling me how the tax system works, Investors can claim deductions relating directly to their Investment (be it depreciate or deduct) and there isn't a decent Accountant in Australia that would argue against this....
> 
> This argument is pointless....




No, the arguement is not pointless.

The ATO don't like people claiming they are making losses on a hobby. Yes, that does include small scale share trading, however it is usually things like making furniture and claiming deductions just because you sold a few chairs... Its still a hobby in the ATO's eyes.


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## rock86 (5 October 2009)

ShareGuy said:


> No, the arguement is not pointless.
> 
> The ATO don't like people claiming they are making losses on a hobby. Yes, that does include small scale share trading, however it is usually things like making furniture and claiming deductions just because you sold a few chairs... Its still a hobby in the ATO's eyes.




Definition of hobby:

An activity or interest pursued outside one's regular occupation and engaged in primarily for pleasure.

Doesn't sound like investing to me


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## kaleon (5 October 2009)

Legislation introduced in the 2008 budget, with immediate effect from May 13 2008, effectively closed a loophole in taxation law which had allowed high-salaried individuals to get a laptop computer almost for nothing. By purchasing a notebook ostensibly for work use via salary sacrifice, buyers would not pay tax on that part of their income, a saving of up to 45% for workers in the top tax bracket. Such PCs were also exempt from fringe benefits tax (FBT), which is paid by the employer on non-cash benefits which accrue to employees, so neither side came out worse from the deal.  

The largesse didn't end there, however. Individuals could also then depreciate the machine (usually over a three-year period), scoring further deductions on their taxable income each year. If you sold the PC as second-hand at the end of that period, it might even prove possible to make a profit on the deal.

That rule had been in place since 1995, but everything changed with the May 2008 announcement, which eliminated the double-dipping option. While you can still purchase a PC (or other technology items including PDAs) under salary sacrifice rules and not have them subject to FBT, YOU CAN'T THEN CLAIM THE DEPRECIATION on those items against your personal income. Only one level of tax saving will be allowed.

If you've purchased a PC in earlier years and are currently depreciating it, that deduction will be permitted for the 2007-2008 tax years, but not in any subsequent years. While a salaried taxpayer might not typically include depreciation on their return, it is possible to do so.

"Prior to the budget announcement it was possible for an employee to claim depreciation on a work-related laptop computer acquired under a salary sacrifice arrangement, the argument being that it is used at home after hours to perform employment duties," an ATO spokesperson told APC. "The new measure makes it clear that any FBT-exempt eligible work items (like a laptop for an example), especially those provided under a salary sacrifice arrangement, will no longer be eligible to be claimed as a depreciation deduction by the employee."

More chillingly even for people planning a late-in-the-financial-year laptop purchase for the tax savings alone, the rules for what you can purchase have been tightened up. Previously, FBT-exempt PCs weren't subject to any formal test of their work role, but that has now changed. Any item purchased as FBT-exempt must be "primarily" for business use, the ATO spokesperson explained. "This type of test is not new. A similar test to determine if mobile/car phones can be considered eligible work related items has been used for FBT purposes for a number of years."

More detailed guidelines are likely to follow in the near future. "The Tax Office is looking at opportunities to provide further guidance to the community on applying this aspect of the proposed law once it has been enacted," the spokesperson said.

However, while those guidelines may well end up being more specific, there's already one clear and inescapable rule: you can't get more than one machine. If you've already got a notebook at work, then there's no way you'll be salary sacrifice a second machine for home use and have it exempted from FBT.

One potential loophole suggested in some online forums is to buy a cheaper machine that flies beneath the FBT radar. FBT amounts under $1,000 don't have to be declared on individual payment summaries, and that figure rises to $2,000 in the new financial year.

However, this represents a misunderstanding of how FBT works. While the FBT amounts may not appear on your individual payment summaries, they still have to be paid by your employer. "The exemption is only for the reporting of such fringe benefits, not for the fringe benefits tax liability itself. Any taxable benefits provided even within this threshold still have to be returned and accounted for by the employer," the ATO spokesperson

As such, there's now little incentive for the employer to help you score a salary-sacrificed notebook PC as a tax-saving strategy, since it now costs the business money regardless. (FBT is calculated on an April-March year, so it also makes for fiddlier paperwork.)

Bottom line? If you genuinely do need a laptop for work, salary sacrifice may make it a little cheaper. But using it to acquire a machine for the kids to play on is very unlikely to fly anymore.


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## alwaysLearning (5 October 2009)

stocksontheblock said:


> You can only claim the deduction if your job/business is that of a share trader. If you trade shares at home as a hobby/way of make additional money then your laptop is not a deduction.
> 
> However, as you have said you would, I would check with the ATO.
> 
> The other question I would ask you is how have you deemed - if you can claim a deduction - that you use it for 50% of the time, and not 10%? As the ATO will most certainly ask you to justify the 50% claim.




If you're a retail trader, shouldn't you be able to do this?

Having an ABN just so that you can be classified as a business even though you just trade for yourself seems a little odd to me. (and i'm not saying that you are saying that or implying that--i'm just speaking in general terms)--I really have no clue at this stage.

I don't know. I'll need to get into contact with an accountant as well at some stage--but only when I actually start to be profitable, lol.


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## awg (5 October 2009)

rock86 said:


> Simple.
> 
> YES, you can claim it as a deduction (even if you are an investor and not a trader). But as you have put, you can only claim 50% of the depreciation as that is the % you use for investing (this % being justified).
> 
> ...




I agree with above answer.

The other possibility if you have children is to examine claiming it via the education allowance


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## Chorlton (5 October 2009)

stocksontheblock said:


> You can only claim the deduction if your job/business is that of a share trader. If you trade shares at home as a hobby/way of make additional money then your laptop is not a deduction.




Surely even if you are a part-time investor, the proportional cost of a laptop (used for investing purposes) can be a legitimate deduction?

If one is not classed as a "Share Trader" then the title of "Investor" can be used and as such a deduction can be made against any Capital Gains acquired through the activity of investing.

Is this not correct?


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## rock86 (5 October 2009)

Chorlton said:


> Surely even if you are a part-time investor, the proportional cost of a laptop (used for investing purposes) can be a legitimate deduction?
> 
> If one is not classed as a "Share Trader" then the title of "Investor" can be used and as such a deduction can be made against any Capital Gains acquired through the activity of investing.
> 
> Is this not correct?




Yeh, as i said above, you do not need to be a trader to claim deductions for items used in share trading but can be a long term investor. The only thing is, obviously if you are using eg. laptop for private purposes you can only claim the amount you use for investing. It's pretty simple in the end.

The reason you can claim deductions for these items against your assessable income is because being a long term investor, you assume and invest with the intent (normally) to receive a stream of income from dividends/(capital gains) which in turn are treated as assessable income, this is even if you received no dividends or gains in the financial year.


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## Krusty the Klown (6 October 2009)

As an accountant, I can hopefully put an end to the debate.

Depreciation of a laptop or desktop PC can be claimed as a general deduction if ANY taxpayer buys, holds and sells shares, proportionate to the time used for this activity compared to private use.

The ATO deems these items to have a 3 year effective life. You can use the straight line method or the diminishing value method to depreciate.

If you sell the laptop at the end of this 3 year period, you have to declare the receipts as ordinary assessable income, if you claim depreciation as a deductible expense throughout.


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## airpoe (6 October 2009)

Krusty the Klown said:


> The ATO deems these items to have a 3 year effective life. You can use the straight line method or the diminishing value method to depreciate.



I still haven't had a change to call ATO yet.

Krusty could you give a brief calculation of the straight line method or diminishing value method?


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## Calliope (7 October 2009)

airpoe said:


> I still haven't had a change to call ATO yet.
> 
> Krusty could you give a brief calculation of the straight line method or diminishing value method?




You don't have to ring the ATO. It's all available on the ATO web site.

http://www.ato.gov.au/individuals/content.asp?doc=/content/00191816.htm

See p 7 for examples


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## Krusty the Klown (7 October 2009)

OK let's say we have an item worth $10K with an effective life of 20 years.

Using the prime cost or straight line method you simply divide 100 (%) by 20, you get an answer of 5. This means you can claim 5% of $10K or $500 p.a. as a deduction for 20 years.

With the diminishing value method, firstly you use double the purchase cost, in this case it will be $20K, then double the depreciation rate to 10%. In the first year depreciation expense will be $2,000. 

In year 2 the written down value of the item is now $8K, so depreciation expense is 10% of $16K = $1,600. The item's written down value is now $6,400 at the end of year 2.

In year 3 the written down value of the item is now $6,400K, so depreciation expense is 10% of $12,800 = $1,280. The item's written down value is now $5,120 at the end of year 3

In the straight line method, the depreciation expense is the same each year of usable life of the asset, in the diminishing value method the expense starts out high and then gets progressively smaller each year.

Hope that makes sense.


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## airpoe (7 October 2009)

thanks for all the help & feedback, now fully understand how to do my depreciation!!


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