The following information is provided as a convenience and has been sourced from the Australian Tax Office website. Any links below will open in a new window on the ATO website.
Tools, equipment and other assets
You can claim a deduction for some or all of the cost of tools, equipment and other assets you buy and use to help earn your employment income.
If you use the tools for both work and private purposes you can only claim for your work-related use of the item.
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You can claim a deduction for tools, equipment and other assets if you use them to perform your work duties. The type of deduction you can claim depends on the cost of the asset.
If the tool or equipment cost you $300 or less, you can claim a deduction for the full amount in the year you buy it, if:
- you use it mainly for work purposes
- it’s not part of a set that together cost more than $300.
You can claim a deduction for the cost over the life of the item (that is, decline in value), if the tool or equipment:
- cost more than $300
- is part of a set that together cost more than $300.
You can only claim a deduction for the work-related use of the item.
You can’t claim a deduction for tools and equipment that your employer or a third-party supplies for use.
Work out your claim
Use our Depreciation and capital allowances tool to help you work out the deduction available from the depreciating asset.
- Decline in value of depreciating assets – individuals
- Capital allowances – $300 immediate deduction tests
- Records you need to keep
You can claim a deduction for some or all of the cost of tools, equipment, assets or products you use to help earn your income. For example:
- Computers and software
- Desks, chairs and lamps
- Filing cabinets and bookshelves
- Hand tools, such as spanners, hammers and screwdrivers or power tools, such as grinders, sanders and hammer drills.
- Protective items, equipment and products, such as hard hats, safety glasses, sunglasses, sunscreens and cosmetics containing sun protection
- Professional libraries
- Safety equipment
- Technical instruments.
You can also claim the cost of repairing and insuring your tools and equipment and any interest on money you borrowed to buy these items.
If you use items for both personal and work-related purposes you need to keep records, such as a diary to show the purpose of use of the item. So that, if requested, you can show how you work out the amount of personal and work-related use.
You may be able to claim a deduction for a handbag, briefcase or satchel you buy to carry items you are required to use and carry for your work, such as laptops, tablets, work papers or diaries. The amount of the deduction will depend on the how much you use the bag for work purposes.
You can’t claim a deduction if you mainly use the bag for personal purposes, such as carrying your lunch and beauty and hygiene products. This is private use.
When you use the bag for both private and income producing purposes, you may need to apportion the deduction you claim based on the amount of time you use the bag for work and for private purposes.
Where you use the bag for work purposes and it costs:
- less than $300, you can claim the deduction immediately
- more than $300, you will generally work out any deduction using its decline in value over its effective life.
Example: allowable deduction for a handbag
Elizabeth buys a handbag for $150 to carry her tablet and work diary between appointments with clients. The handbag is only used to carry the work items and she carries another bag for her personal items. She does not use the handbag that carries her tablet outside of work hours.
As she is required to use the tablet and diary for her work the bag is being used for the production of assessable income. Elizabeth can claim a deduction for the handbag.
End of example
Example: no deduction is allowable for a satchel
Arki buys a messenger satchel for $220 to carry his lunch and snacks, personal medical kit and private grooming items. He also uses it to carry a mini tablet, which he uses in his income producing occupation.
Arki also carries the satchel outside of work hours. This means the satchel is not mainly used for the purposes of producing assessable income. Arki can’t claim a deduction for the satchel.
End of example
Example: apportioned deduction for a handbag
Theresa buys a large handbag for $280 to replace her current handbag, as she is now regularly required to take a small laptop and client paperwork to and from work. She continues to use her handbag to carry personal items and takes it with her outside of work hours.
The large handbag is being used for both income producing and private purposes, so the deduction would need to be apportioned between both uses.
End of example
Watch: Transporting bulky tools and equipment