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How does depreciation (of a laptop) work?

Discussion in 'The Pub' started by mjt57, Jun 17, 2007.

  1. How does the depreciation of a laptop work and how do you claim it?

    We bought one, cost $2099. Can either depreciate it or claim it as a salary sacrifice option.

    Am considering the latter, but I would like to know how the former method works?

    Presumably the online taxpack will handle it when the ATO releases it on July 1.
  2. I'm not an accountant, so you may want to get more reliable advise than mine, but...
    I'm pretty sure that you cannot claim the initial outlay as a tax deduction, but you can claim the amount it is assumed to depreciate in the years afterwards. ie. somewhere around 30% per year for computer equipment I think it was? You should have claimed a loss of value close to the purchase price over three years or so.
    The actual savings in dollar terms depends entirely on your tax bracket (the more you pay in tax the more valuable the deduction will be). For a $2100 spend, you reduce your taxable income by maybe $6-700 (anyone?) per year.
    Whether you are eligible is a fairly complex matter, however.
  3. Whether you are eligible is a fairly complex matter, however.[/quote]

    I should be. If I can sal. sac. one then you'd reckon that I'd be able to claim it on my tax. Amounts to the same thing as far as reducing taxable income goes, doesn't it?
  4. Being able to salary sacrifice a laptop does not automatically mean you can claim it as a tax deduction. _Anyone_ can salary sacrifice a laptop (one of the only umm 2 items you can from memory) no matter if it relates to work or not. You then can only claim the laptop as a tax deduction later on if you actually use it for work (i.e are a computer network admin who uses the laptop to remotely log into work machines to do work etc ).

    Hope that helps.
  5. I can sal. sac tools of trade (which includes PDAs), power bill, laptop, super and of course, novated leases.

    I think that I can claim the laptop for work if I wanted to. It'll have work related stuff on it for starters.

    Thing is, if you can sal sac a laptop why would you be precluded from claiming it back on your tax if you chose the latter? (I'm not talking about those who sal. sac. a laptop THEN claim it on their tax). ie. if you can't claim a laptop then why would they allow you to sal. sac. it? Or, if you are allowed to sal. sac. it, but can't claim it, then what is the difference between that and a desktop PC which you can't sal. sac. but can deduct from your tax return?

    Seems to be somewhat inconsistant.

    Anyway, that's not the original question which was - how does depreciation work? ie. the mechanics of it?
  6. it's inconsistant because the government has deemed laptops (and maybe one other thing, not sure tho on that) can always be salary sacrificed no matter what. With your question of the mechanics,

    ow are depreciation deductions calculated?

    Before 21 September 1999, depreciation deductions were calculated by applying a 'depreciation rate' fixed by reference to the effective life of an item of plant to either the cost or opening undeducted cost of that plant. After 21 September 1999, the legislation with the exception of small business taxpayers and certain specific items does not provide for a 'depreciation rate' as such, rather deductions are calculated using a statutory formula. However, effective life remains part of the formula for both the diminishing value method and the prime cost method.

  7. Who is telling you to do one or the other?

    You should be able to do both (assuming your Laptop is used for business purposes).

    Because Laptops are exempt from Fringe Benefits Tax your employer should have no problems with you salary sacrificing it.

    For an individual depreciation of a laptop for this year is worked out based on the following formula:

    (($Cost x (% business use))/effective life (3years)) x 1.5 x (y / 365)

    y = the number of days during the financial year you held the asset.

    Lets say you had the laptop for 30 days and you used it 75% for work:

    (($2099 x 75%)/3) x 1.5 x (30/365) = $65

    Although this year I think they are allowing you to use 2 as the mulitplier instead of 1.5 in which case you deduction would be $86.

    PS: I had the formulas looking a lot better but netrider didnt like it and crunched everything up..
  8. mjt,

    Will you be using the laptop for work purposes??

    I would find it hard to believe that the ATO would let you salary sacrifice a laptop then claim its depreciation against your tax. That would be double dipping and the ATO doesn't like that.

    From memory, you can claim 40% of the written down value of the laptop for tax purposes, however that may have changed to the useful life of the asset, in which case, what is the useful life of the asset. How many people actually have laptops last 3 years??????

    I am really glad I dont work as a tax accountant.
  9. From reading:
    Whether you are eligible is a fairly complex matter, however./quote

    I should be. If I can sal. sac. one then you'd reckon that I'd be able to claim it on my tax. Amounts to the same thing as far as reducing taxable income goes, doesn't it?


    To me that sounds like the laptop isn't used for work but then again, it hasn't been said if it has been used or not for work (related) purposes.

    One thing that this has highlighted to me that I guess I'd best be getting to reading up on is that I bought the laptop in salary sacrifice for work purposes (no games software, it was used for me to do ssh'ing to work and not much else. I guess 98% work related, 2% other (used it to upload fuel maps to my bike, that's it). Anyway, I was sacked due to my injury almost 5 months after I bought it, so I gotta see if the depreciation formulas need "the total" time since I bought it or the total days I bought it until I was sacked. But I also use my laptop to help me look for work (doing courses, reading tech pages to keep abreast on what's going on in the tech world, ssh'ing to *nix machines to keep my mind fresh with unix commands etc). Bit complex I reckon unless I find an easy "examples page" or readme as my accountant is myself. Well, I did do year 12 accounting and some related stuff at Uni (statistics, mathematics, computers *laughs*) :grin:

    Time to hassle our best friends boyfriend. She's been with her boyfriend for 1 1/2 years now, he just graduated as a CPA, might be time I get some "practical" use of him, use his studies to see what I have to do.. I love finding an "easy way out" of stuff, it makes life fun ;)
  10. No-one. I can sal. sac. it and will be doing so.

    Just wondering how the depreciation bit worked.

    That works out to around $377 if I entered your formula into Excel correctly.
  11. Depends on who is asking...

    Unless you're a politician, of course....

    Well, this laptop just replaced a 4 yo Dell Inspiron 1100 (P4 2.4ghz) which our daughter has stolen off us. It's still working fine. Just needed something newer with a bit more grunt. Missus wants to do a bit of A/V work on it, hence getting a Core 2 Duo 2 ghz based laptop.
  12. Undi,

    Now for the bad news. You would only be able to claim until you lost your job.

    You can only claim it for work purposes if you are using it for work. You can claim for study purposes as long as it is helping or related to your current work. It would be like somebody studying part time a course not related to their current employment couldn't claim the course costs.

    Using it to keep abreat of latest techniques in programming, etc would not be an allowable deduction. It needs to be directly related to assessable income at the time.

    Hope that helps (like a hole in the head). :LOL: :LOL:
  13. It _is_ an inconsistency, but at the moment it is allowable.

    I'm not sure how much longer it will be possible *shrug* but it was definitely possible last year because we did it.
  14. Ok so maybe I didnt write the formula very clearly. Its a little hard to do it on here..

    The ATO provides a calculator to help you work it out here: http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=Depreciating_assets.XR4&go=ok

    The effective life of a laptop can be found here:

    http://law.ato.gov.au/atolaw/view.h...set Categories) Table B as at 1 January 2007;

    You might have to copy and paste that one, but trust me its 3 years. The ATO's effective life can be very different to how long something will actually last.