Typically, you're eligible for an immediate deduction if you purchase a depreciating asset for work purposes, provided its cost is $300 or below. However, assets exceeding this threshold must be depreciated.
What qualifies as a depreciating asset
Essentially, it's an asset with a finite effective lifespan that's expected to diminish in value during its period of use. Examples include tools, equipment, computers, and books.
How is the useful life determined? The Australian Taxation Office (ATO) specifies the useful life of each asset, which is subject to annual revisions.
How to add the asset in TaxTank
TaxTank simplifies the process by automating all applicable rules and rates.
Navigate to the work tank depreciation tab, and the select the Add button.
By default, we have the 'Prime Cost' method selected 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). You can change this to using the diminishing value method by changing the toggle.
From the category dropdown choose your asset. In this example, we are selecting the category for a laptop.
Then all you need to do is 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).
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.