Tools, equipment and other assets

Individuals may be able to claim a deduction for tools, equipment and other assets that are directly used in generating your income. If you use your tools and equipment for both work and private purposes you may still claim a reasonable estimate of work- related use. You may claim a deduction for items including but not limited to: Computers, Software, Safety Equipment, Personal Protective Equipment and Hand Tools.

There are two methods that can be used when claiming a deduction on tools, equipment and other assets are:

• Immediate Deduction

• Decline in value

The Immediate Deduction

The immediate deduction is for individual items that cost below $300 or items that form a part of a set that together cost less than $300 (e.g. a tool set). The total cost that is attributed to work use, can be deducted in your tax return for the year the item was purchased.

Example: Jan is a cabinet maker and purchased a set of screwdrivers for $200. She uses them 50% of the time for work and 50% for private purposes. Jan may be entitled to claim an immediate deduction of $100 (50% of the total amount paid for the screwdrivers).

Decline in Value

The decline in value can be used on items or sets that cost more than $300.  These items have a limited effective life and can be expected to decline in value over the time they are used. The effective life of an asset will vary depending on each asset, for more information on the effective life of your particular asset visit the ATO.

The start of decline for your asset begins on the first day you use it for either private or work. If you have used an item for private use for 2 years, then later use it to earn your income, the decline in value is still calculated from the first day of use as a private item.