Year End Tax Deductions – “equipment”
If a retailer promotes a TV for a 40% discount at $2,500 with the slogan “eligible taxpayers will get a tax deduction”, is that real and should I be tempted?
If you have just begun working from home instead of the work office, as an employee you should ask “can I claim the $2,500?”
Short answer - No.
Home office work related expenses rules will allow depreciation of the non-private portion if there is a connection with employment. A reasonable question would be – why do you need a $2500 TV screen compared to a $150 screen or a notebook? Whilst the quantum is not the test, it goes to the credibility of the connection with employment.
If you can make the connection, the depreciation claim may be 20% of the cost for the remaining days to the end of the year. At a marginal tax rate of 30% the benefit is minor.
The justification for buying any equipment should firstly be economic, with tax benefit secondary
An alternate question may be – “why can’t I benefit from the instant asset write off that is constantly reported and advertised?
This relates to small business entities who probably don’t care about a tax deduction right now – they only care about staying in business. For most small business, tax deductions can help but the economic benefit of any expenditure is the first rule.