Generally, you can claim an immediate deduction for a depreciating asset you buy and use for work purposes, if the asset cost $300 or less. However, assets costing more than $300 must be depreciated.
So what is a depreciating asset? In short, it's an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is in use. Tools, equipment and other items such as computers and books are depreciating assets.
Where does the useful life come from? The ATO prescribes the useful life of each asset which it revises each year.
How TaxTank works
To keep it simple, in TaxTank we have automated all the rules and rates so you just need to add your assets in 3 quick steps and we'll take care of the rest.
Step 1 - Select the Method
Navigate to the work tank depreciation tab, and the select the Add button.
By default, we've selected the 'Prime Cost' method which is the most common method for work related assets because it provides an consistent depreciation claim amount each year, and lets the balance be written off as soon as it falls below $300 (which we automate for you).
However, if you have previously been using the diminishing value method, or just prefer it, you can update the method by changing the toggle.
Step 2 - Choose your asset
From the category dropdown choose your asset.
Step 3 - Complete the fields
Then complete the remaining fields as follows;
Description - Usually the item name but whatever works for you
Amount - Enter the purchase price
Completion Date - Enter the purchase date, or the date installed and ready for use if not the purchase date.
Claim percentage - Enter a reasonable percentage of work related use (best guess). Except for vehicles, this will be your logbook percentage of claim.
Closing Balance - For existing schedules, confirm the closing balance is correct. If not, untick the 'Is this correct?' box and adjust the amount so the schedule can be correctly calculated going forward.
Upload Receipt - Upload proof of purchase to keep the ato happy.
And whola, your done. We'll create the deprecation schedule to ensure you claim the right amount across the assets useful life.
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