Advice on Timing for Laptop Tax Deduction

LBitcoinKing on 31/10/2024 - 03:45
Last edited 31/10/2024 - 03:47

Hey everyone, I’m not a tax expert, but I’d like to get some advice on a tax-related question my roommate has.

He’s currently working in the IT industry, juggling multiple casual positions throughout last year, and his total income (salary, bank interest, etc.) is only around $35k. Recently, he was selected for a merit pool, but in the worst case, he might not secure a permanent role until the next financial year.

He’s in urgent need of a powerful laptop, probably worth around $4k, as he’s been struggling with an outdated model that’s really laggy.

What do you think is the best timing for him to buy this laptop for maximizing ATO tax deductions? My thought was to hold off until he lands an ongoing position, but I’m not sure if that’s the best approach. Any advice would be greatly appreciated. Thanks!

Financial Computer Laptop Tax Deduction

Comments

  • Dollar General on 31/10/2024 - 05:43

    Your friend can only have the laptop depreciate over a number of years so it’s not a major concern if the laptop is purchased now & claimed as an expense when he lands the job

    • jv on 31/10/2024 - 14:07

      Not if they have an ABN.

  • geekcohen on 31/10/2024 - 05:51
    +7

    He’s in urgent need of a powerful laptop, probably worth around $4k, as he’s been struggling with an outdated model that’s really laggy.

    Why does it need to be powerful? Why $4k budget? That is 10% of his yearly salary (before tax) just on a laptop…….

    • BitcoinKing on 31/10/2024 - 09:21

      I suppose he was so into the concept of premium laptop like X1 Carbon or MacBook Pro stuff?

    • jv on 31/10/2024 - 14:08
      +1

      Why does it need to be powerful?

      Because the one they have now is 'laggy'.

      • samfisher5986 on 01/11/2024 - 12:52
        +2

        "my current laptop can't load websites as fast as the ones in the movies"

  • SBOB on 31/10/2024 - 05:58
    +12

    What IT roles are expecting you to byo laptop, especially ones where the cost of such hardware would be so significant on what looks to be incredibly entry level wages?

    • CyberMurning on 31/10/2024 - 09:08
      +1

      the one that pays 35k a year casual jobs…

    • BitcoinKing on 31/10/2024 - 09:22

      Yes that’s what I suggested to him, 1200ish Lenovo deal is awesome.

  • holdenmg on 31/10/2024 - 06:19

    Your roommate doesn't need a powerful laptop to join OzBargain and instantly become one of Gerry Harvey's "Professionals"
    (looks good on your C.V.)

    Maybe updating the "outdated" laptop with maximum RAM and a SSD with a fresh OS install would help.

    Do they just want to mine bitcoins (for fun and profit)?

    • BitcoinKing on 31/10/2024 - 09:23

      I thought it is MemeCoin Era now?

  • apsilon on 31/10/2024 - 06:33
    +2

    Doesn't really matter when, you can only claim depreciation, not the full amount, from when you buy it and have to be using it to make their income. What sort of IT work requires you supply your own PC? Generally with most orgs BYO device is at least frowned upon if not out right not allowed. I'm also not sure what they need to do with it, perhaps I'm out of touch but $4k would be into gaming territory. You could probably spend half that and have a very capable machine for most tasks.

    • holdenmg on 31/10/2024 - 06:42

      $35K sounds low for an income unless Part-Time or an Intern.

      Are they a Full-Time Employee or Part-Time, or Independent Sub-Contractor (a start-up?).

      A good idea to use:
      https://www.fairwork.gov.au/tools-and-resources/record-my-ho…
      to ensure your are getting paid for all the work done.

    • SBOB on 31/10/2024 - 06:44
      +1

      but $4k would be into gaming territory.

      There's no way they just trying to justify a new gaming laptop as a tax claim right :)

    • BitcoinKing on 31/10/2024 - 09:24

      Sadly, he didn’t even play video games, maybe just being too stressful while applying jobs in competitive market.

    • jv on 31/10/2024 - 14:10

      Doesn't really matter when, you can only claim depreciation

      Not true.

      • apsilon on 31/10/2024 - 20:28

        Given they're working casual roles and looking for a full time one, I'm pretty sure they're not running a business.

        • jv on 31/10/2024 - 21:50

          A sole trader working as a contractor can have an ABN

          • apsilon on 01/11/2024 - 05:12

            @jv: Yes they can but they can only claim the write off against tax earned under that ABN. Again, not likely something they're doing in this case given they're working multiple casual roles.

            • jv on 01/11/2024 - 08:58

              @apsilon:

              given they're working multiple casual roles.

              They might be invoicing under their ABN

              • apsilon on 01/11/2024 - 18:13

                @jv: That's not how casual roles work. If they'd said they were contracting to multiple clients then sure but a casual doesn't invoice for their work, they get paid for the hours they're employed.

                • jv on 01/11/2024 - 21:02

                  @apsilon:

                  That's not how casual roles work.

                  Some do… If you invoice for your work….

  • AngoraFish on 31/10/2024 - 06:56
    +4

    If the laptop is purchased this financial year he can start depreciating it this financial year (July 2024 to June 2025). There is no timing benefit to holding off on the purchase, it could be now or it could be in June 2025 and the ATO will not care.

    All that matters is that he can only claim the percentage of time the laptop is used for work purposes. Even if he used the laptop for one hour, so long as he doesn't also use the laptop for gaming or other personal use, he can start claiming 100% of the depreciation on the laptop this financial year.

    If, on the other hand, he uses the laptop for 9 hours of gaming and 1 hour of work he can only claim the percentage of the purchase cost related to work (ie in this case 10%/$400).

    The ATO allows a laptop to be depreciated over two years.

    At a maximum marginal tax rate of 16% (up to an annual income of $45k), assuming that the laptop is 100% used for work purposes only, the reduction in income tax payable by purchasing a $4K laptop is $640 over the life of the laptop, which corresponds to an effective reduction in his income tax of $320 in each of the tax years that he is depreciating it in.

    Note that he won't be seeing the $320 until he gets a tax refund in August/Sept/Oct 2025, so hopefully he is not expecting to see the cash in his pocket any time soon.

    • BitcoinKing on 31/10/2024 - 09:28

      Thank you for the explanation, maybe I’m the one that should preorder the lastest M4 Max model to support Tim.

      • Naigrabzo on 31/10/2024 - 09:28

        Do it! Order it!! Time will thanks you.

    • Naigrabzo on 31/10/2024 - 09:28

      Love your gaming comment.

    • terlalu on 31/10/2024 - 10:41
      +2

      wait what!? is this how depreciation works?

      My understanding is that you can only depreciate the asset for the time since you purchased and used it. So if you purcahse the laptop on 29 June 2025, you can only claim 1 day of depreciated costs, not the whole year, so instead of getting back $320, you're getting back about $1.

      • AngoraFish on 31/10/2024 - 11:19

        You are correct and my advice above is partially incorrect. The first year's depreciation should be calculated as days held in that financial year divided by 365. Which means that the depreciation would also roll over into the third tax year for the residual. My bad.

  • Davo1111 on 31/10/2024 - 07:04
    +8

    I didn't realise resetting windows passwords required a 4k laptop

    • holdenmg on 31/10/2024 - 07:22

      That is pretty high-end and getting to the limits of my tech.

      Whatever happened to billing people for telling them to turn the technology off and on again… lol

  • bemybubble on 31/10/2024 - 07:17
    +3

    Imagine you were never going to get a deduction for a laptop. What would your decision be?

    That decision my friend, Will be the correct one…

  • CyberMurning on 31/10/2024 - 07:57
    +1

    I think some harvey normal staffs lied and tried to sell him 4k laptop because its very powerful and also must buy anti virus, ms office package and $50 hdmi cable.

  • CyberMurning on 31/10/2024 - 08:03
    +1

    This is classic tricks that marketing people use to make sales to the noobs.

    Buy this laptop you can depreciate it dont worry bro! Ato money to your pocket!
    Or
    Buy this off the plan unit property look how much refund youll get from ato! Negative gear bro, so yummy.

  • altomic on 31/10/2024 - 08:49
    +2

    my best tip for Timing for Laptop Tax Deduction - your roommate should buy the laptop before claiming it as a tax deduction.

    He’s in urgent need of a powerful laptop, probably worth around $4k

    yeah gotta spend at least $4k for a powerful laptop that can do…..<gestures vaguely>

    • CyberMurning on 31/10/2024 - 09:03

      i heard there will be pacman and digger 2025 edition games that need 4090 gpu and OLED screen.
      /s
      obviously they dont check ozb, because even the amazing deals here for powerful laptop are around 3k only, very rare we see 4k deals on laptop because, well most ppl dont need it

  • Ozbar Gain on 31/10/2024 - 09:08
    +1

    Is your room mate your son,the 38k income an odd job he did while studying and the laptop for gaming?

    • BitcoinKing on 31/10/2024 - 09:44

      Gosh, being a millennial celibatarian is literally a crime now.

      • Ozbar Gain on 31/10/2024 - 11:04

        No but tax fraud is

  • Bignudge on 31/10/2024 - 09:21
    +1

    Take a look at cashback schemes.

    I needed an 18" laptop as I don't have an office and move tables like 5 times a day and ended up getting an Alienware M18 R2 with a RTX 4070 and i7 14700HX listed for $3000. There was a 15.6% cashback from TopCashBack bringing it down to ~$2500.

    A few weeks after that, Shopback offered a 20% cashback. Which will make it even cheaper to buy if I waited.

    • BitcoinKing on 31/10/2024 - 09:52
      +1

      That’s a good bargain, mate!

  • Naigrabzo on 31/10/2024 - 09:27

    Damn! 35K per year income. Must have had very few hours of actual work and many hours of gaming perhaps?

    • BitcoinKing on 31/10/2024 - 09:30

      Nah, he just worked for casual positions.

  • Bignudge on 31/10/2024 - 09:30
    +1

    And tax deductions or not, it's not worth it to buy something that powerful if you don't actually need it.

    A 38K salary puts him in the 16c for each $1 over $18,200 tax bracket. Totalling $3,168 in tax required. [EDIT: I may be wrong as I didn't factor in the low income tax offset thingy IF it applies, but that will work in the favor of my comment]

    Even at the simplest calculation which incorrectly writes off that whole 4K laptop at once in the same financial year…. brings it down to total tax requirement of $2,528. So your friend would be spending $4000 to save $640 in tax.

    If you calculate it properly and depreciate it either using the prime cost method or effective life method split over 2-5 years…. it'll be a fraction of that in savings each year.

    Bottom line, not worth it for the sake of just a tax deduction

    • BitcoinKing on 31/10/2024 - 09:40

      Even he got picked by merit pool and offered a 80k position, still a big investment since most organisations will provide devices (shitty but usable). But consumerism and unemployment does change people.

      • Bignudge on 31/10/2024 - 10:03

        I believe your friend should buy a laptop…. opposed to using the company assigned one cause I know how they are.

        If he needs decent performance… get one of those 15.6" gaming laptops when they go on sale. Something along the lines of a Nitro 5 with an RTX 3060 and some i7 13XXX etc should do the trick. Something like that was good enough for me to some 3D modelling on Fusion 360, edit videos on Adobe Premier Pro, and play some video games. It should be around $1000 when on sale (keep an eye on ozbargain!)

        • BitcoinKing on 31/10/2024 - 10:09

          He mainly just does the coding and compiling, I don’t think he even needs the RTX card. But being obsessed with the premium package or the concept like Intel Ultrabook or MacBook Pro.

          • Bignudge on 31/10/2024 - 11:22

            @BitcoinKing: Bruh, that sort of workload you need something light and snappy. I'm imagining some sort of LG gram (I don't have one and can't vouch for it personally)

  • plmko on 31/10/2024 - 10:12
    +1

    Many people here aren't giving you real advice.

    Ignoring that it's ridiculous that someone needs a $4k BYO laptop for a minimum wage job.

    Why do you even need to consider tax if it is something clearly required for work. It is a no brainer to just buy it, tax shouldn't even be a consideration.

    • BitcoinKing on 31/10/2024 - 10:14

      Yes, I will share the link and let him decide. Respect with no judge.

    • Mechz on 31/10/2024 - 11:29
      +2

      Lowering your taxable income is the national sport in Australia.

      • jv on 31/10/2024 - 14:06
        +1

        Lowering your taxable income is the national sport in Australia.

        I prefer maximising my after tax income…

  • jv on 31/10/2024 - 14:05

    Advice on Timing for Laptop Tax Deduction

    You need to ask some who is licenced to give you financial advice.

    • JakeyJooJoo on 31/10/2024 - 14:31

      Yeah agreed, your mate should totally employee a financial advisor, sort out all of his affairs.

      • jv on 31/10/2024 - 14:32

        employee a financial advisor

        You don't need to 'employ' them, just use their services. Also, they are tax deductible.

        • JakeyJooJoo on 31/10/2024 - 14:39

          Hmm… money is tight next week, should I buy the $1.20 homebrand baked beans, or the superior heinz beans that are half price for $1.35…. I'll think on it and decide after my $2500 financial advisor discovery meeting tomorrow.

          • jv on 31/10/2024 - 14:49

            @JakeyJooJoo: $2.50 baked beans is a bit different to a $4K laptop which may/may not be tax deductible.

            Most accountants won't charge $2500 for simple tax advice.

            • JakeyJooJoo on 31/10/2024 - 15:00

              @jv: Lol no shit baked beans are different to a $4K laptop. You encouraged financial advice, $2500 is pretty standard pricing for initial meeting overviews with financial advisors. Yes accountants are much cheaper.

              Buying a laptop as an IT worker is about as vanilla as it gets in regards to taxation claims, no financial advice beyond this thread is needed… to say otherwise is like like telling a plumber to get financial advice before buying spanners.

              • jv on 31/10/2024 - 15:04

                @JakeyJooJoo:

                Lol no shit baked beans are different to a $4K laptop.

                I guess you learnt something new today.

  • clover on 31/10/2024 - 18:04

    I am curious which company allows employees using their own laptops? Especially the ones in tech industry. Are they not that concerned about security, privacy, etc?

    • CyberMurning on 31/10/2024 - 19:29

      True all this smells fishy

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