Highlights

  • Selling depreciated work equipment can trigger a tax adjustment.
  • An optional 50% reduction offers an alternative calculation in eligible cases.
  • The better method depends on whether disposal creates income or a deduction.
  • Work-use records can help taxpayers compare both approaches.

An old laptop may seem worth little more than its resale price. Yet a device previously used to earn wages can carry a hidden tax calculation when it is sold or discarded. New rules offer eligible employees a shortcut, but choosing the easiest method does not always deliver the best result.

The Tax Calculation Behind a Sale

A balancing adjustment arises when a depreciating asset stops being held or used in relevant circumstances. Broadly, tax law compares its termination value, such as sale proceeds, with its remaining adjustable value. A positive difference may increase assessable income; a negative difference may support a deduction. Private use can reduce the taxable portion. The outcome depends on the asset's history, not simply the money received at sale.

What the 50% Option Does

From 1 July 2026, eligible taxpayers may use a fixed 50% reduction instead of calculating the private-use adjustment under the detailed method. Conditions include having used the asset to earn assessable labour income and having claimed the new standard deduction in a year overlapping the asset's effective life. This is not a blanket exemption for half the sale proceeds, nor a rule that every second-hand phone qualifies. It changes the relevant balancing adjustment calculation.

A Small Example With a Big Difference

Assume a worker sells an eligible laptop and the unadjusted balancing adjustment is $200 of income. Under the optional fixed approach, a 50% reduction leaves $100 assessable. If detailed records instead show only 20% private use and produce a $40 reduction, the taxable amount would be $160. In that scenario, the shortcut is more favourable. Reverse the situation so disposal produces a $200 potential deduction, and the detailed 20% reduction could preserve $160 of the deduction, while the fixed approach leaves only $100.

The Standard Deduction Adds Another Layer

The $1,000 standard deduction for eligible workers begins with the 2026–27 income year. Certain balancing adjustment deductions connected with labour-income assets count among covered work expenses, meaning they can reduce the remaining standard deduction. They do not automatically stack on top of the full $1,000. Balancing adjustment income, however, can still be assessable. This asymmetry makes it worth modelling the whole tax return before choosing a method.

Keep the Evidence Before Disposing

Record purchase price, sale or scrap proceeds, dates and any work-use estimates. Evidence of depreciation claimed in earlier years may be essential when calculating adjustable value. If an asset was partly private, records can preserve access to the more precise method. People with mixed employment and business use, or complex capital gains consequences, should obtain tailored advice before treating the 50% option as the default.

A Practical Detail Worth Checking

Timing can also affect the result. A device disposed of before the new standard deduction applies may not meet the shortcut's conditions, while an asset kept across multiple income years requires careful tracking. Checking the relevant tax year is as important as calculating the disposal proceeds correctly.

General information only. This article is not personal taxation or financial advice.