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Depreciation on computer

Discussion in 'Accounting, Tax & Legal' started by jp777, 2nd Apr, 2015.

  1. jp777

    jp777 Member

    Joined:
    24th Jun, 2013
    Posts:
    14
    Location:
    South Melbourne
    I have a five year old pc (cost $1800) which I haven't claimed depreciation on before ? would it be worth doing an amendment to claim the fully depreciated cost for the last few years? (I invest in the stock market full time from home, 75% of the pc use is related to that.)
     
  2. serena349

    serena349 Quantity Surveyor

    Joined:
    18th Jun, 2015
    Posts:
    1
    Location:
    Sydney
    Hi, I think you need to understand depreciation rules. Let me explain with example, if buy a copy machine for $1,600 at the end of March. Assuming the machine has a salvage value of $400, you can depreciate $1,200 of the cost over the life of the copier. A copy machine is considered 5-year property for tax purposes.

    I hope this helps you.

    Thanks
     
  3. Timi

    Timi New Member

    Joined:
    21st Aug, 2015
    Posts:
    1
    Location:
    Sydney
    Hi jp777, this is my understanding:

    There are 2 methods to depreciate your assets.
    1. Diminishing value (highest decline in earlier years)
    2. Prime cost (equal decline over asset life)

    If you want to depreciate costs for 5 years, you would need to amend each year separately. Each amendment would cost you 1 year's worth of tax return (i.e. whatever your accountant charges you to do this year's tax return).

    I am estimating you could probably depreciate $250 - $300 per year. Depending on your marginal tax rate, you would get back a portion of this. Then you have to pay your accountant. Is it worth it? (Almost definitely not)

    If you really wanted to, your best option would be to use Option 1 and only amend the year with the highest decline (Year 1 or 2, depending on your purchase date). Then potentially you could depreciate $400 - $500 in that single year. Depending on you tax rate, you would get back a portion of this, and so now you have to pay your accountant...again, is this worth it?

    Conclusion - Probably not worth it, but at least now you know, for next time!

    Cheers

    PS. Not an accountant!
    (so seek independent advise)
     
    Last edited by a moderator: 21st Aug, 2015