Computer Deductions Are Being Double-Checked This Year

The 2013/2014 financial year is nearly over, and that means it's time once again for our annual Tax Week series of posts. The big issue to bear in mind this year? The Australian Taxation Office (ATO) will be carefully checking claims for usage of computers and phones for work purposes.

Home office picture from Shutterstock

In previous years, the ATO has singled out particular occupations for additional auditing; in 2012, for example, IT professionals and plumbers were singled out. This year, rather than concentrating on specific occupations, it has decided to focus more generally on work-related expenses (which total $19.5 billion a year, statistics fans).

Three categories are being particularly checked: overnight travel, transporting bulky tools and equipment, and work-related usage of computers, phones or other gadgets. We imagine the last one is going to have the biggest impact on most Lifehacker readers.

If you need to use your phone or computer for work, you are entitled to claim that cost against your taxable income. Similarly, if you need internet access at home for work purposes, you can claim part of your ISP costs.

However, the claim needs to be proportional: if you use your technology for both work and private purposes (which is the case with most mobile phones), you need to apportion the costs between them. That's the case even if your phone bill is a flat-rate deal: you still need to divide what you pay. The ATO recommends keeping a diary for at least four weeks to establish your usage patterns for both personal and private use.

The ATO's announcement of the 2013/2014 crackdown highlights common mistakes people make with deductions of this kind:

  • Not being able to demonstrate that the service in question was needed for work purposes.
  • Not being able to prove what proportion of the usage was for work. If you're audited and can't provide evidence, the entire claim is likely to be disallowed.
  • Lodging a claim for expenses which have been reimbursed by an employer.

The lesson? Make sure you can demonstrate why a claim is relevant, and don't claim more than you're entitled to.

Reminder: For specific tax advice relating to your individual situation, consult a registered professional.


Comments

    Maybe this is a very specific question but I'll ask to hear your input. I bought this professional keyboard called HHKB Pro 2 and I only use it at work as a developer. It's a fairly expensive keyboard and it cost me about 400 dollars. My work definitely was providing me with a keyboard but I prefered to have this one since it's my job to type code all day and this keyboard actually makes lots of difference but is this reason a good enough one to pass the "Not being able to demonstrate that the service in question was needed for work purposes." criteria?

    This is why i have a computer that i use only for work. I can claim all costs associated with it each year, up to $3,000.

    Don't you have to depreciate anything over $300?

      yep that $299 computer part you bought is fine, but that $301 computer part has to depreciate over 4 years.

      Makes it hard to buy a new pc in parts if you would rather claim it all back at once, rather than over 4 years

    This will be an interesting year for me, having started teaching video game design and bought an XBOne to do Project Spark at work and play at home. How does one provide evidence for this balance?

      This is what I'm wondering. I design / build apps and websites, so I use my phone for testing stuff I'm working on.

      How am I supposed to prove how much I use it though? :/

      Keep a diary for a month and then extrapolate as per the article's quote of the tax office recommendation.

        A diary can be falsified, so how is this evidence?

    How does the ATO know that the deduction was computer related? If you are submitting a paper based tax return all you do is put a single amount under other work related deductions, which can cover a range of other expenses. You don't send all of your receipts to them. If using etax, according to the help file, descriptions for expenses are not transmitted to the ATO (you could enter a generic description anyway).

      If the total involved seems high, then the ATO can request an audit -- and that will require all those details.

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