Employees and self-employed people who purchase tools, equipment, or technology for work can claim a deduction — either in full in the year of purchase (for items under $300 used primarily for work) or as depreciation over the asset’s effective life (for items $300 or more). The key requirement is that the item is used to earn income, not for private purposes.
The $300 Rule — Immediate Deduction
If a single item costs $300 or less and is used primarily (more than 50%) for work, you can claim the full cost as an immediate deduction in the year you buy it.
“Primarily” means more than half of the use is for work. If the item is used 60% for work and 40% personally, the item is primarily for work — but you can only claim the work-related proportion (60%), not the full $300.
Example: A tradesperson buys a work tool for $250. Used entirely for work. Claim: $250 in the year of purchase.
Example: An office worker buys a desk lamp for $120. Used 70% at their home office desk for work. Claim: $120 × 70% = $84.
Items Over $300 — Depreciation
For items costing more than $300 (or items with significant private use), you depreciate the item over its effective life. Only the work-use proportion of the depreciation is deductible.
Formula (prime cost method): $$\text{Annual deduction} = \text{Cost} \times \text{Work use %} \div \text{Effective life (years)}$$
| Item | Cost | Work use | Effective life | Annual deduction |
|---|---|---|---|---|
| Laptop | $1,500 | 80% | 3 years | $400 |
| Smartphone | $1,200 | 60% | 3 years | $240 |
| Camera (for work) | $2,000 | 90% | 5 years | $360 |
| Desk | $600 | 100% | 10 years | $60 |
The ATO publishes standard effective lives for most asset types in Tax Ruling TR 2023/1. Check the current effective life for your specific asset.
Diminishing Value vs Prime Cost
There are two depreciation methods:
- Prime cost: Equal amounts each year over the effective life
- Diminishing value: A higher deduction in early years, declining over time
Both are accepted by the ATO. Most individuals use prime cost for simplicity. Once you choose a method for an asset, you cannot switch.
Items Used Both for Work and Privately
If an item is used for both work and personal purposes, only the work proportion is deductible. Keep evidence:
- A diary or log showing work use vs personal use
- For a computer: estimate based on daily usage patterns
- For a phone: 4-week representative diary of work vs personal calls and data
Self-Employed — Instant Asset Write-Off
Self-employed sole traders and small businesses (with aggregated turnover under $10 million) may be eligible for the instant asset write-off concession for assets below the annual threshold. The threshold has changed frequently — check current ATO guidance for the applicable threshold in the relevant year.
When available, this allows immediate deduction of the full cost of an eligible asset in the year it is first used or installed ready for use.
Common Items Claimed Under This Rule
| Occupation | Common deductions |
|---|---|
| Tradie | Power tools, hand tools, testing equipment |
| Nurse/health worker | Stethoscope, fob watch, medical kit |
| IT professional | Computer, second monitor, external drives |
| Teacher | Laptop, printer, educational materials |
| Photographer/videographer | Camera, lenses, editing equipment |
| Office worker | Home office computer, keyboard, mouse, webcam |
Frequently Asked Questions
Can I claim a laptop I use for both work and personal activities? Yes — claim the work proportion. If you use the laptop 70% for work, deduct 70% of the cost (as depreciation if it cost more than $300, or in full if under $300 and primarily work use).
What records do I need for tools? Receipts showing the purchase price, date, and item description. For mixed-use items, a usage record (diary) showing the work proportion.
Can I claim the full cost of a $1,200 smartphone in one year? Not as an immediate deduction under the $300 rule (it costs more than $300). You depreciate it over its effective life (3 years) at the work-use proportion. If 60% work use: $1,200 × 60% ÷ 3 years = $240 per year.
My employer provides most tools. Can I claim my own tools as well? Yes — you can claim tools you bought yourself that your employer did not provide, as long as you use them for work. You cannot double-claim tools provided by the employer.
This article provides general tax information. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.