Deductions for self-employment: how to deduct the cost of a new computer from your taxes?

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Do do you use your home, laptop or desktop computer for work? Then, in addition to operating expenses, you can deduct the portion of the decline in value (depreciation) of the device that is related to your employment.

You will likely qualify for an immediate tax deduction on any laptop or desktop computers purchased for business purposes.

Tax deductions on your new computer

Only the portion of the cost used for business purposes can be deducted from the cost of the computer or laptop. To do this, you need to keep a diary for four weeks to develop a usage pattern.

Your accountant or tax expert can then help you allocate the appropriate sum and advise you of the documents you need to keep to support your claim.

To be eligible for the deduction, the property must be used before the end of the tax year (June 30). You must file a claim the following year if an item you order is delivered the following year.

Businesses with less than $500 million in revenue will be able to make full use of the instant asset write-off provisions beginning July 1, 2023. However, this will only apply to items costing less than $1,000.

You can deduct your Internet fees and expenses for setting up and maintaining your computer as a small business owner in addition to the price of your computer.

Small business owners who operate through a corporation are eligible for a 25% tax break. You get a tax reduction if you run a business as a sole proprietor or in partnership at your marginal rate (between 19% and 45%, minus the Medicare levy).

It’s a good idea to think about what you can and can’t claim given that the ATO has announced a major crackdown on higher than expected tax deductions. Experience matters when it comes to getting the most out of your tax return, all things considered.

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