Are Computers Expenses or Assets?

I have recently moved to contracting and want to transfer some home computer equipment into the company. Is this treated as an expense or an asset? How much tax relief is it worth, eg. it the value was €1000 how much would get written off against tax.

Thanks,
Peter Sellers.

Re: Are Computers Expenses?

It's an asset and, for tax purposes, written off over eight years.

7 years, 15% for each of the first 6 years and 10% in the 7th.

Depending on the work you do there may be an argument for treating them as an expense. Take a programmer or IT contractor. They are likely to be replacing their computer equipment frequently. In such circumstances it would be appropriate that new computers be treated as repairs and renewals and not capital items.

Also you should not capitalise software. Thats a whole different set of arguments relating to realsiable values, valuations etc.

Command, the 15% rate (and 10% for year 7) hasn't applied since December 2002. It's 12.5% for eight years.

And, you'd have a VERY, VERY difficult time convincing the Revenue to allow the purchase of a computer and related equipment as an expense.

I work in IT and have to update equipment frequently. Generally is it very difficult to sell second hand computer equipment and it is usually valueless after about 3 years. Writing off over 8 years doesn't make much sense.

It doesn't PS, but that's how it works.

However, if you sell or scrap a machine in less than the 8 years, you get the remaining allowances then. For example, if you spent €1,000 on a computer, use it for three years and scrap it (getting no proceeds) at the beginning of year 4, the tax allowances will work as follows:

Year 1 = 125 (1,000/8)
Year 2 = 125
Year 3 = 125
Year 4 = 625 (original cost of 1,000 less allowances granted of 375 less sales proceeds of NIL).

Is it possible to rent equipment to yourself, like rent the use of a laptop from myself to my company. So you "pay" 100 euro a month from your company to you privately, and then the company treats the rental as an expense and makes it tax deductible (making you money in effect)?

jkenefick said:

Is it possible to rent equipment to yourself, like rent the use of a laptop from myself to my company. So you "pay" 100 euro a month from your company to you privately, and then the company treats the rental as an expense and makes it tax deductible (making you money in effect)?

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For every expense there must be an income. So if the company gets a deduction for a payment to you then you have an income to be declared. The company gets 12.5% CT deduction. You pay 20% or 41% tax on the income.