Home – New Forums Money matters Depreciation on computer on tax return

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  • #973099
    happygirl
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    Hi,

    I use my computer mainly for work related purposes (80% is work related). Given the fact that I am a sole trader, can I claim any depreciation costs on my computer when I do my tax return and if so how.

    Thanks :-)

    #1059706
    taxpert
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    Sure you can – just put the claim in at item P8 Business Income and Expenses.

    Basically, the amount of the claim will be

    Written Down Value of the computer x (1.5/effective life of the computer) x 80% x proportion of the year you held the computer.

    Written down value means what you paid for it less what depreciations claims you have already made in previous years. If this is the first year then just what you paid for it.

    Effective life is how long the computer will last for. If this is the first year then i would choose 3 years, if not then stick to what was used last year.

    Remember to only claim a portion of the year if this is the first year you are depreciating or if you sold it during the year.

    Cheers,

    #1059707
    happygirl
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    Thanks for such a thorough explanation :-)

    Quick question please :

    Written Down Value of the computer x (1.5/effective life of the computer) x 80% x proportion of the year you held the computer.

    – This will be my first year (first year as a sole trader, so I am sure there are numeorus things I can claim on tax return and will miss!!)

    1) Can you please explan what the 1.5 represents.
    2) Is the lifespan of most laptop HP Pavillions DV6 series – 3 years.

    Thanks in advance

    Cheers

    #1059708
    Past-Member
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    Happy Girl – if you are a sole trader there are lots of things you can claim portions on. It really is worth getting a good accountant to help you. Find one you can talk to and who provides good information. There are many on this forum as well.

    All accountant fees are tax deductible as well.

    Tax can be complicated when you are juggling everything including personal, business and depreciation, which is why using an accountant is a really good idea. Best wishes.

    #1059709
    taxpert
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    Hi,

    1) The 1.5 is to get an accelerated rate of depreciation so you can get a bigger deduction sooner. This is how you work it out under the diminishing value method of depreciation. The alternative is the straight-line method whereby the amount of the claim is the same every year.

    2) 3 years sounds right to me but feel to make it more or less if you think you will use it for more or less time.

    Cheers,
    Simon

    #1059710
    happygirl
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    Thanks for your assistance – much appreciated :-)

    #1059711
    Dave@SCBA
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    taxpert, post: 73881 wrote:
    Hi,

    1) The 1.5 is to get an accelerated rate of depreciation so you can get a bigger deduction sooner. This is how you work it out under the diminishing value method of depreciation. The alternative is the straight-line method whereby the amount of the claim is the same every year.

    2) 3 years sounds right to me but feel to make it more or less if you think you will use it for more or less time.

    Cheers,
    Simon

    Simon, Sorry to correct you but it is 2/effective life – 1.5 went out in 2006 from memory.

    3 Years write off is the usual for Computers.

    Kind Regards,

    #1059712
    taxpert
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    Thank you Dave, you are absolutely right. I remember when that change came in.

    My apologies Happygirl for getting such a basic thing wrong. It seems I have become too reliant on my firm’s computer software to do the depreciation calculations.

    Cheers,

    #1059713
    happygirl
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    Thanks to you all.

    Appreciate all the time and effort you have all gone to. Darn computers always get things wrong!!

    Boy am I looking forward to tax time. Looking at e-tax last year and Item 15, I am now concerned that I am not even an independant contractor and have simply been employed as one.

    If that is the case – will this bite me on my tax return?

    Cheers

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