Can I claim laptop repair on tax in Melbourne?
I often get asked ‘Can I claim laptop repair on tax?’
Before you visit your local tax accountant about claiming a laptop repair on tax, make sure you read this article!
Traditionally, Australian self-employed people have been able to claim tax deductions for business equipment or assets if they are using them solely for the purpose of generating income. However, in recent years, the Australian Tax Office has begun to clamp down on people who claim tax deductions for assets used both personally and in a business capacity.
Mixed-use vs Work-use
This is why it’s important to be careful when claiming a laptop repair on tax, because if you provide personal and general use items such as laptops to your business, they may consider the item to be of mixed-use.
In fact, the ATO has noted that they are cracking down on businesses that claim items as mixed-use assets. As a result, if you use an item for both work and private purposes, failing to identify it as being of mixed-use may see you slapped with a tax bill equal to the amount of deductions you have claimed over the years.
Speak to your accountant
Luckily, there is still time for people to amend their tax returns and settle any discrepancies before facing large penalties. If you’re unsure about how to go about claiming laptop repair or other expenses on tax return forms, speak with your accountant or financial advisor for advice.
If you have used your personal equipment at work but failed to declare it as such during previous tax filings, make sure you act quickly and speak with a representative from the taxation office to make amends.
If you bought, say, a new laptop and used it for both work and personal use during the year, then you can claim deductions on your tax return that reflect how many of your files were related to either employment or private pursuits (and not both).
The easiest way to find out whether an item will be considered as mixed-use is by checking its depreciation schedule against the Australian Taxation Office’s list of items that are not eligible for depreciation. If no information is available for an item in question, speak with a taxation official before making any assumptions.
Calculate the percentage of use
Some of the most common equipment and appliances people use at home and then take to the office include laptops, mobile phones, and digital cameras. These can all be used for both private and work-related purposes, but it is important to understand what percentage of use is taxable.
If you intend on claiming laptop repairs as a tax deduction, then the device must have been used only in your home and not at your place of employment or anywhere else.
Only include laptop repairs that were used solely in your home and no place else. That means if you regularly take your laptop to work or the library, those repairs should not be claimed on tax as this would be considered taking it out of the home.
When claiming for a laptop repair in Melbourne, always have proof of purchase (or invoice) available in case you are asked to show your receipts upon request! This is especially true if you’re claiming laptop repairs that cost more than $300; it will become even more important then, as anything over this amount needs official proof before it can be added onto your taxes. Keep records for at least five years after the tax assessment has closed. Be wary of possible scams like e-mails asking for personal information and credit card details. The chances are very high that these are scams to obtain your information for other purposes.
It is important to prevent damage from happening, as it will make it easier for you to claim on taxes in the future. Always take care of your expensive equipment to avoid costly repairs later on. One way to do this outweighs all others as being pretty simple – always backup your data regularly, and store the backups away from where you keep your laptop/desktop computer. This means that if a fire or other disaster strikes then you should still be able to recover your data without having to pay someone else a lot of money first! Of course, accidents can never be completely avoided, but they can certainly be limited with so many easy-to-apply methods.
Keep all paperwork
If a disaster does strike and your laptop is in need of repairs, make sure to keep all paperwork you obtain from the repair company. If you end up claiming these costs on your tax return then you must have every piece of paper that proves what work has been done – if your receipts are lost or can’t be found for some reason, then this will play against you when filing the claim with Australia’s Taxation Office.
In order to have a successful claim relating to laptop repairs, keep the following in mind: – You must have original invoices or receipts from qualified tradespeople/companies to claim these costs on a tax return. Remember that a receipt showing proof of payment won’t always cut it so make sure you get a receipt from the repair person/company stating there and then that it will be on-the-record. – This has to be for work done in Australia, not interstate or overseas. – You can’t claim more than your annual income (including laptop repairs).
You will need to show evidence of the initial purchase price i.e. receipts, bank statements showing transfers, contracts, etc… Failure to do this may result in penalties or even prosecution by the Australian Taxation Office.
The Australian Taxation Office has set out certain rules and guidelines about what qualifies as a legitimate computer repair expense. Some of these guidelines include: – No more than one claim per item/year i.e. if your laptop breaks during 2021, you can’t claim it again in 2022. The item must have been purchased less than 12 months ago i.e. the original purchase date of the laptop has to be within 12 months of when you’re claiming it on your tax return (this usually only applies to brand new laptops).
You cannot claim software or hardware that is not required for work
You cannot claim for any software or hardware that is not required for work i.e. if you don’t need the internet connection that the laptop provides and instead use a broadband modem; then this is not eligible for a tax deduction and therefore should not be included with the initial purchase price (however, if you do need it, then you can include this under “internet plan” in one of the depreciation items).
The laptop must be suitable for use at work i.e. it must have the same specification as other laptops that would normally be used at work (e.g. your boss does not buy you a cheap netbook to get less work done because it cannot handle basic tasks).
After making a claim, it can take up to two months for the Australian Taxation Office to approve it. To avoid any late fees or penalties keep all records of purchase and any correspondence with the ATO handy just in case they ask for proof that there is indeed no record of purchase available anywhere else!
According to The Australian Government’s Right To Information, “a taxpayer may also be able to claim a deduction for the decline in value of depreciating assets used for work purposes if their effective life is less than three years.”
According to this ATO guide, “a computer, laptop or notebook is a depreciating asset with an effective life of 3 years if you use it for work. You may be able to claim a deduction for its decline in value after the first year of owning it.” The amount you can claim depends on how much business use your computer gets.
Therefore, if you want to claim for repairs on your personal laptop that has broken down due to wear and tear, then you need not worry about depreciation as this kind of repair does not affect the structure (or functionality) of your machine like other kinds.