deductions for smashed lap top

[letiha]

Just wondering... i bought a new lap top in July, something very unfortunate happened to it, any way I had to replace it.

Do I get to write of the whole amount in this financial year for the 1st one, and as per depreciation for the 2nd.

I suppose I should keep the smashed lap top for proof if i got audited.

 

[TheCamel]

you can only claim 1 laptop per year i beleive (Although i could be wrong,and that culd be FBT related)

 

[Pushka]

Could you claim it on Insurance (work or home contents?) depending on what happened?

 

[sebsez]

Salary Sacrfuce & Depreciate

Hi guys,

While on the subject of notebooks, can you salary sacrifice a notebook and then depreciate it over 3 years? Depreciation would be against work related activities (I work in IT) and for property investing activities.

I worked out that if this is allowable a $3500 notebook would only end up costing me around $700 after I finished depreciating it!

Cheers

Seb.

 

[Arkay]

I raised this with my accountant a while back and was recommended not to do it as it's double dipping on the deductions. You already received a tax saving when you bought it out of pre tax dollars. To then depreciate it would be a little cheeky. Though I still think it should be viable as long as you depreciate the actual purchase cost to you after tax breaks.

Maybe ask your accountant and see if you get a better result than I did with mine at the time

Cheers,

Arkay.

 

[letiha]

Already tried claiming it on my insurance, apparently because i'm not an owner occupier i can't...pity i rang now, should have waited till I moved into my new house.

What about a lap top and a Desk top. I replaced the lap top with a P.C, can I write of the lap top entirely, and then depreciate the PC

 

[geoffw]

While on the subject of notebooks, can you salary sacrifice a notebook and then depreciate it over 3 years? Depreciation would be against work related activities (I work in IT) and for property investing activities.

I worked out that if this is allowable a $3500 notebook would only end up costing me around $700 after I finished depreciating it!

This used to be quite legal- I don't know if it still is. I vaguely remember something that this "loophole" was closed.

Check with your accountant.

 

[Pushka]

Because you are salary sacrificing it, the ownership belongs to the employer, who can depreciate it - because they still pay the same amount of $$$ as if it was salary. That was my understanding, anyway!

 

[Apocalypse]

The Tax Ruling that "allowed" one to depreciate an asset that had been salary sacrificed/re-imbursed was removed in 2005 I believe. Changes to the legislation allowed a different interpretation to apply - one where the depreciation couldn't be claimed.

However, I have wondered if you can't achieve the same effect by salary sacrificing a laptop, finding it doesn't suit your purposes, selling it, and then purchasing another (not sal sac though) and depreciating that one as per normal. For example, you might find a 15" laptop isn't big enough, and you need a 17", or vice versa.

 

[bennido]

The Tax Ruling that "allowed" one to depreciate an asset that had been salary sacrificed/re-imbursed was removed in 2005 I believe. Changes to the legislation allowed a different interpretation to apply - one where the depreciation couldn't be claimed.

Did some googling on this topic and it seems that "double dipping" is still allowed.

Here's a recent news article on this subject ...

http://www.news.com.au/adelaidenow/story/0,22606,21921335-5006367,00.html

 

[Mry]

Did some googling on this topic and it seems that "double dipping" is still allowed.

I'm sorry to say this, but it is has been removed effective 28 June 2005. The person writing that article probably hasn't been notified of the change by the relevant parties.

Previously, you could rely on TD 93/145 to use the double dipping strategy, but then the ATO withdrew it on the 29th of June 2005 and replaced it with TD 2005/D17. Now, the substance of each determination is basically the same, but notice the change of the title.

TD 93/145 (the old withdrawn one) "Income tax: is an employee entitled to a deduction for depreciation in relation to an item of plant used for income producing activities when he or she is subsequently reimbursed for the cost of the item?"
TD 2005/D17 (the new one) "Income tax: is an employee's deduction for the decline in value of a depreciating asset used for a taxable purpose affected by section 51AH of the Income Tax Assessment Act 1936, if they are subsequently reimbursed an amount for the cost of the asset by their employer? "

The second determination refers to the 1936 act, not the 1997 act rewrite. Why is this important?

Because section 20-40 of the ITAA 1997 requires a person claiming a deduction under Division 40 (ie claiming depreciation) to declare in their assessable income any recoupment they receive for any depreciation claimed. You can look at the example at section 20-40 for how it works. And the 1997 act overrides the provisions of the 1936 Act. Division 20 covers more areas to prevent someone from double dipping where someone else incurs the expense so you can have a further look if you want.

And Julia pointed this out some time ago.

 

[bennido]

Hi Mry,

I am no tax expert, but as a layman reading the rulings again and again, it still reads like I can ... (1) Salary sacrifice my laptop + (2) Depreciate the laptop in my personal tax return ...

Also, is "Salary sacrifice" considered an employer reimbursing you ?

 

[sebsez]

Exactly what I was thinking. Reading the ATO articles above it refers to claiming depreciation of plant on items which have been partially or fully reimbursed by your employer.

Salary sacrificing you are still paying the full amount for the item, but with pre-tax dollars. The item still has an effective useable life and declines in value.

However it still is double dipping because you are making the same deduction twice, the only difference is that you get the full deduction in one year with salary sacrificing and you get the deduction spread over X years with depreciation

Cheers.

Seb

 

[Mry]

I am no tax expert, but as a layman reading the rulings again and again, it still reads like I can ... (1) Salary sacrifice my laptop + (2) Depreciate the laptop in my personal tax return ...

Of course reading through the rulings states that. That's the point. The rulings have been overruled. Section 20-40 trumps them. The rulings are there to point out that the previous treatment under the old act was fine.

A fringe benefit is treated as a payment to an employee. This is what allows you to claim the depreciation on the laptop even though it was purchased by the employer.

To further my point, I would also like to point out that the 2005 ruling does not refer to the 1997 act at all, even though it was written eight years since the new act was brought in. Why do you think that is?

 

[Apocalypse]

To further my point, I would also like to point out that the 2005 ruling does not refer to the 1997 act at all, even though it was written eight years since the new act was brought in. Why do you think that is?

Circumlocution.

While I can see that they're trying to say "look, under the old rules this was OK", but they've changed the 'question' so much that the answer doesn't really pertain to the original query. Effectively the question has been changed to fit the original answer. Why don't they change the answer?

Q. "Income tax: is an employee entitled to a deduction for depreciation in relation to an item of plant used for income producing activities when he or she is subsequently reimbursed for the cost of the item?"

A. No. While Section 51AH of the Income Tax Assessment Act 1936 does not apply to reduce a deduction for depreciation, Section 20-40 of the ITAA 1997 does. etc etc

Anyway. I would argue that the simplest thing is just buy a laptop, depreciate as per normal (subject to appropriate work related use), then independantly salary sacrifice to acquire another laptop at any point, and do with this as you would...give it away, use it, sell it to a friend who was going get a laptop anyway.Section 58X of FBTAA 1986 says:

Any of the following benefits provided by an employer to an employee of the employer in respect of the employee's employment is an exempt benefit:

(b) a property benefit where the recipients property is an eligible work related item;

It then goes on to define a laptop as "an eligible work related item", with the only proviso being that you can only do it once per FBT year. Note while there is a proviso that

A mobile phone or a car phone is only an eligible work related item if the phone is primarily for use in the employee's employment

there is no such proviso for a laptop.