claiming power tools for investment property

Discussion in 'Accounting & Tax' started by Jackson, 19th Aug, 2015.

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  1. Jackson

    Jackson Active Member

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    Last financial year I bought a power tool set to the value of $399 and used it for various works for the investment properties and partly for personal use.

    Given the power tools were used primarily more for the investment properties, can I claim the immediate deduction of $300 instead of claiming it progressively.

    Can anyone advise if I should split the $300 between the properties or can I claim it under one property? Can anyone also advise which category should I be claiming it under (capital allowance, repairs and maintenance, sundry rental expenses etc?)
     
  2. Azazel

    Azazel Well-Known Member

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  3. Depreciator

    Depreciator Well-Known Member

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    It's tricky because as you said the tools are for personal use as well as for use at the rental property. You accountant might let you claim a portion of the purchase cost as 'repairs/maintenance'.
     
    BMT Tax Depreciation likes this.
  4. The Y-man

    The Y-man Moderator Staff Member

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    Nothing ever gets fixed at my PPOR.... (really.... it needs some TLC)

    The Y-man
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The % of the original cost may be deductible if its falls under $300. ie Lets assume 2/3rd IP use.. 2/3 x $399 = $266.

    The test for deductibility applies after any adjustment for private use.

    The ATO might ask a dumb thing like if you kept a diary of the power tool use.
     
  6. Brizza

    Brizza Active Member

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    If it was used 100% for repairs on an IP, would it be 100% deductible? It's not classed as a capital expense in any way because it's a tool that you can use again and again? :confused:
     
  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Not necessarily. Its the total tool use. Try telling the ATO you dont use it privately. The test is "mainly" so if you had a work tool and used it incidentally for private use that OK but not shared use. When its shared you need a reasonable basis and sometimes the ATO assume private use unless there is a exception. Onus is on taxpayer to satisfy the ATO. If you acquired an additional item that is set aside and used only for rental property maintenance that may be a arguement that avoids the need for a diary to apportion and works well.. But lying can be detected and checked and then you will have a problem. ie Please send us a picture of both sets and receipts or other proof of acquisition for BOTH sets. This is captured by the ato view that also follows concerning any deductions.....The ATO view is.....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. So if you claim to have two sets and cant prove the work use set is owned they can deny the other set you say is for the property. They can use these rules when they dont believe your claims.

    Watch the "set" rule too. eg One set of batteries and then a whole set of Ryobi items that use the batteries. Each can be under $300 but it still fails

    Tax law requires items that cost $300+ by a individual taxpayer not in business to be depreciated over their effective life where the item or set has a enduring use over time rather than immediate consumption (eg sandpaper, screws, adhesive). The Commissioner publishes a table and this can be used or if its not listed a effective life can be self assessed. Write off is not a valid assessment. The rules for depreciation also consider a set and the cost of $300+. If its exceeded its depreciable. Then a % of the depreciation disallowed for the private use element. So private use doesnt bypass the thereshold unlike a business asset which can... But why would you switch write off for ....depreciation against a rental ??

    That said there is a "hand tool" exception allowing write off where the use is mainly work producing income ... but it applies to income producing use. Rental income is passive and repairs dont in themselves produce income so that rule cant be used. eg a carpenter uses a saw to cut and make things from timber for income. A property owner may use it to assist a repair or to construct a article that isnt sold. eg a kitchen benchtop. That rule applies to ....
    • Calculators
    • 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.