swallow Posted May 13, 2016 Share Posted May 13, 2016 I have asked this question to many people I have met on the jobsite but different answers from everyone. My question for anyone that can answer it is.... Tax deductions for tools purchased. On the ATO website it states any tool purchased under the value of $300 can be written off 100% on tax if its used solely for the purpose of work. So am I right to assume thats 100% of the cost of the tool or 100% of the tax? Some people claim to have received the full amount for tools and some claim to have only received the tax? Where others hage said they didnt get any? I have purchased a few thousand dollars of tools this tax year so would be great to clarify this? I will be using an accountant but seems so did everyone else i spoke to with different outcomes? Help! Quote Link to comment Share on other sites More sharing options...
Bungo Posted May 13, 2016 Share Posted May 13, 2016 I have asked this question to many people I have met on the jobsite but different answers from everyone. My question for anyone that can answer it is.... Tax deductions for tools purchased. On the ATO website it states any tool purchased under the value of $300 can be written off 100% on tax if its used solely for the purpose of work. So am I right to assume thats 100% of the cost of the tool or 100% of the tax? Some people claim to have received the full amount for tools and some claim to have only received the tax? Where others hage said they didnt get any? I have purchased a few thousand dollars of tools this tax year so would be great to clarify this? I will be using an accountant but seems so did everyone else i spoke to with different outcomes? Help! The ATO does not reimburse the cost of tools! Whoever told you that they got full amount of tools back is completely and utterly mistaken. No question about that. Whoever got nothing either didn't fill their return in properly or the items were capitalised and maybe they just didn't recognise the capital allowance deduction in their return. So if a tool costs $300 and is expensed you would save X% of $300 (where X is whatever your tax rate is). Quote Link to comment Share on other sites More sharing options...
swallow Posted May 13, 2016 Author Share Posted May 13, 2016 Thanks bungo. This is off the ATO website.. If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost. If the tools are used for both work and private purposes you will need to apportion the amount you claim. If you have a computer that is used for private purposes for half of the time you can only deduct 50% of the cost. The type of deduction you claim depends on the cost of the asset: For items that don't form part of a set and cost $300 or less, or form part of a set that together cost $300 or less, you can claim an immediate deduction for their cost. For items that cost more than $300, or that form part of a set that together cost more than $300, you can claim a deduction for their decline in value Examples of tools, equipment or assets: calculators computers and software desks, chairs and lamps filing cabinets and bookshelves hand tools or power tools protective items, such as hard hats, safety glasses, sunscreens and sunglasses professional libraries safety equipment technical instruments Sounds confusing. Quote Link to comment Share on other sites More sharing options...
Bungo Posted May 13, 2016 Share Posted May 13, 2016 Thanks bungo. This is off the ATO website.. If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost. If the tools are used for both work and private purposes you will need to apportion the amount you claim. If you have a computer that is used for private purposes for half of the time you can only deduct 50% of the cost. The type of deduction you claim depends on the cost of the asset: For items that don't form part of a set and cost $300 or less, or form part of a set that together cost $300 or less, you can claim an immediate deduction for their cost. For items that cost more than $300, or that form part of a set that together cost more than $300, you can claim a deduction for their decline in value Examples of tools, equipment or assets: calculators computers and software desks, chairs and lamps filing cabinets and bookshelves hand tools or power tools protective items, such as hard hats, safety glasses, sunscreens and sunglasses professional libraries safety equipment technical instruments Sounds confusing. It doesn't seem remotely confusing to me, but I caveat that with I have been an accountant for 24 years. :wink: Which bit is confusing, I can try to clarify. Quote Link to comment Share on other sites More sharing options...
swallow Posted May 13, 2016 Author Share Posted May 13, 2016 The fact that it says you can claim for the full cost of the asset. U0 to the value of $300? Quote Link to comment Share on other sites More sharing options...
Wa7 Posted May 13, 2016 Share Posted May 13, 2016 (edited) I have asked this question to many people I have met on the jobsite but different answers from everyone. My question for anyone that can answer it is.... Tax deductions for tools purchased. On the ATO website it states any tool purchased under the value of $300 can be written off 100% on tax if its used solely for the purpose of work. So am I right to assume thats 100% of the cost of the tool or 100% of the tax? Some people claim to have received the full amount for tools and some claim to have only received the tax? Where others hage said they didnt get any? I have purchased a few thousand dollars of tools this tax year so would be great to clarify this? I will be using an accountant but seems so did everyone else i spoke to with different outcomes? Help! The way I look at it being in the construction trade is that you claim every tool 100%, now at the end of the financial year lets say you have spent 10k on tools etc and have earned 100k you will only pay tax on 90k. At the moment there is also the ability to write off single purchases up to 20k in the 1 financial year instead of over a few years which used to be the case. Edited May 13, 2016 by Wa7 Quote Link to comment Share on other sites More sharing options...
blossom Posted May 13, 2016 Share Posted May 13, 2016 Lots of people misunderstand and think the ATO gives them the value of what they have spent back. That isn't how it works. You have your total income for the year, minus what you have spent. That then gives you the total you are taxed on. Quote Link to comment Share on other sites More sharing options...
Diane Posted May 13, 2016 Share Posted May 13, 2016 The way these things are advertised is very misleading - take the small business 'bonus' that the government made a big thing about whereby you can depreciate the full cost of an asset up to $20k in the first year.... lots of small business owners that i know thought that meant they could take out a loan to buy a $20k car and then they'd get the money back from the taxman (I know, some people maybe should do some sort of financial course before being allowed to run a business!)... whereas actually they need to have made in excess of $20k profit in the year, and the depreciation will then just reduce the amount of profit they will have to pay Company Income tax on that year. If they didn't make a profit, spending $20k on something, and even worse, taking a loan out to buy it, is NOT a good business idea!! Quote Link to comment Share on other sites More sharing options...
swallow Posted May 13, 2016 Author Share Posted May 13, 2016 Thank you all for this clarification. Time to find myself an accountant! Quote Link to comment Share on other sites More sharing options...
Bungo Posted May 13, 2016 Share Posted May 13, 2016 The fact that it says you can claim for the full cost of the asset. U0 to the value of $300? If the asset is 100% for business then you can claim for the full amount. But this terminology does not mean ATO reimburses you the full amount, it means your taxable profit is reduced by that amount. So say, before you consider your new asset, that your taxable profit is $1,000. You buy an asset for $300 to be expensed, now your taxable profit is only $700 dollars. So you will pay less tax, but it won't be $300 less tax, it will be your tax rate % of the $300. Quote Link to comment Share on other sites More sharing options...
Wa7 Posted May 13, 2016 Share Posted May 13, 2016 Thank you all for this clarification. Time to find myself an accountant! Good idea. A good accountant will cost $2 - 300 depending on how organised you have been with your paperwork and this fee is also 100% deductible so no reason not to pay for their services, a good accountant will more than cover their fee. Quote Link to comment Share on other sites More sharing options...
Bungo Posted May 13, 2016 Share Posted May 13, 2016 Good idea. A good accountant will cost $2 - 300 depending on how organised you have been with your paperwork and this fee is also 100% deductible so no reason not to pay for their services, a good accountant will more than cover their fee. Agreed. I wouldn't plumb my own bathroom or fix my own car. Yet a lot of people insist on doing their own accounts and don't have a clue. Quote Link to comment Share on other sites More sharing options...
swallow Posted May 13, 2016 Author Share Posted May 13, 2016 Totally agree. Will look around for a good accountant in the newcastle area! Thanks again for all your help Quote Link to comment Share on other sites More sharing options...
Wa7 Posted May 13, 2016 Share Posted May 13, 2016 Totally agree. Will look around for a good accountant in the newcastle area! Thanks again for all your help Dont forget that you can claim pretty much anything work related so fuel,insurance,tyres,rego,services/repairs all 100%. You get the idea anyway good luck. Quote Link to comment Share on other sites More sharing options...
Ken Posted May 13, 2016 Share Posted May 13, 2016 Dont forget that you can claim pretty much anything work related so fuel,insurance,tyres,rego,services/repairs all 100%. You get the idea anyway good luck. Don't say "you can claim 100%" you'll confuse them again! For one thing it's only 100% if those costs are 100% work related (otherwise you have to reduce for the private use) and for another it's only a reduction in your taxable income not in your tax. You'd have to be paying tax at a rate of 100% (which of course no one is) to get it all back dollar for dollar. Quote Link to comment Share on other sites More sharing options...
Wa7 Posted May 14, 2016 Share Posted May 14, 2016 Don't say "you can claim 100%" you'll confuse them again! For one thing it's only 100% if those costs are 100% work related (otherwise you have to reduce for the private use) and for another it's only a reduction in your taxable income not in your tax. You'd have to be paying tax at a rate of 100% (which of course no one is) to get it all back dollar for dollar. My post says "work related" it's up to the op to decide the % of use, if I spend $100 on work equipment its 100% regardless if I use it for 10 minutes on my own home and an earlier post explains a very basic scenario. Quote Link to comment Share on other sites More sharing options...
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