When Bags Could Be Tax Deductible

Handbags, briefcases and satchels purchased to carry items for work purposes (such as laptops, tablets, work papers or diaries) may be deductible. The deductibility of the bag will depend on:

  • Cost – It’s easier to justify to the ATO that a $300 bag is for work purposes than a $10,000 Prada bag.
  • Type of bag – Large bags that can actually carry work items will more likely be deductible (than small handbags that only fit keys and lipstick).
  • What sort of use – Having a bag exclusively for work purposes will maximise deductions.

3 different scenarios of usage

  • If a bag is used for predominantly personal purposes, such as carrying a lunch box as well as beauty and hygiene products, then the purpose is private and a tax deduction cannot be claimed.
  • If a bag is used predominantly for work purposes eg. to carry a laptop and work diary, and there is another bag used for personal items, then the bag that is being used for work purposes is considered to be used for the production of assessable income, which allows for a full tax deduction.
  • If a bag is regularly used to carry a small laptop and client paperwork to and from work, but is also used to carry personal items and is used outside of work hours, then the bag is considered to be used for both income producing and private purposes, so the deduction would need to be apportioned between both uses.

Types of Tax Deductions

The type of deduction you claim depends on the cost of the asset:

  • for items that don’t form part of a set and cost $300 or less, or form part of a set that together cost $300 or less, you can claim an immediate deduction for their cost
  • for items that cost more than $300, or that form part of a set that together cost more than $300, you can claim a deduction for their decline in value.

News Article: In the bag: tax deductions that didn’t exist a decade ago

 

Unsure whether an expense which you incurred is tax deductible? Send us all your receipts when requesting for your tax return to be prepared. Our tax accountants will check and advise on tax deductibility. Contact us for assistance with your tax returns today!

Search

+