Tools and Equipment Deductions In 2024

Claiming a tax deduction for the cost of purchasing tools and equipment for last financial year? Make sure you know the rules around what can be an immediate deduction and what you have to depreciate over a number of years. When tools and equipment are used for both business and personal reasons you must apportion the claim for the business purposes only.

Example: You purchase a new electric drill and use it for work and at home you simply adjust your claim to reflect how much you use the drill for work related purposes, and how much it is used for private purposes.

Tools and equipment costing more than $300 cannot be claimed as an immediate deduction and will need to be claimed over the assets effective life (this is known as depreciation).

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Criteria Of Tools And Equipment

You can claim the cost of any tools or equipment as a tax deduction:

If the tools and equipment contributed to you earning assessable income during the financial year
If you can demonstrate that they are used for the work purposes, rather than mostly private use
Items that cost less than $300, you can claim an immediate deduction for the total cost
Items that cost more than $300 (or that are part of a set that together cost more than $300 in total), you must depreciate them over their effective life (depreciation)
For repairs and insurance costs related to tools and equipment
For upgrades to tools and equipment

What Is Classed As Tools And Equipment?

There are a number of standard items that can be classed as tools and equipment and can be claimed as an immediate deduction or depreciated over its effective life, including:

Computers, software and calculators
Desks, chairs and lamps
Filing cabinets and bookshelves
Hand tools and power tools
Protective items (hard hats or safety glasses)
Professional libraries
Safety equipment
Technical instruments

What Can't I Claim As Tools And Equipment?

You cannot claim a tax deduction if:

Any tools or equipment are not required to earn assessable income
The full cost of any tools or equipment that are also used for private purposes. You must apportion and substantiate your claim for personal use and this is not a tax deduction.

Speak to a Tax Specialist to ensure you are claiming all the tool and equipment deductions you are entitled to!

LAST UPDATED 25/12/2023

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