Here’s how to claim your new handbag on tax. You’re welcome.

Video by MWN

Are you looking to buy a new handbag in the EOFY sales? Or perhaps you’ve just bought one. Well, hold onto that receipt because you might just be able to claim your bag as a tax deduction. Yes, really. How? First, the bag needs to fit the criteria of a work-related expense.

If you regularly need to carry around work-related items, the Australian Taxation Office (ATO) will allow you to deduct the cost of a holder or a bag to transport these items from your taxable income. For example, if you need to take your laptop home or to a meeting, then a laptop bag would count as a reasonable work-related expense. Unless of course, your work pays for it. You can only deduct things that you’ve paid for yourself.

Handbags can fall under the same category as laptop bags. If you use your handbag to carry work-related items then you can probably justify claiming it as a work-related expense.

So how do you know if your handbag counts? Well, if you use a laptop or other bulky items for work then you need to be able to fit these items inside the bag. If your handbag isn’t equipped to carry these, then it won’t count. Sorry.

Also, you should probably only use this bag for work. If you use the same handbag outside of work, including on the weekends, you can only claim a percentage of the cost back. You can work this out by keeping a logbook or diary that documents your usage. Work out the percentage of time that the bag is used for work and apply that same percentage to the price of the bag. This is the amount that you can then claim as a tax deduction.

Alternatively, you can do what I do and use a completely separate bag for the weekends. Once the work week is over, my work bag goes into the cupboard and doesn’t come back out again until Monday morning.

If your bag meets these criteria then it probably is tax deductible. Now it’s time to work out how to deduct the cost. If the amount that you’re deducting is less than $300 then you can deduct it all in one tax return. However, if the cost is more than $300 then you’ll have to deduct the cost over a few years and account for depreciation. My accountant recommended that I deduct the cost of mine over three years.

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If your bag meets these criteria then it probably is tax deductible. Image: Getty.

If this all sounds a bit complicated, then speak to an accountant who can provide you with specific advice tailored to your situation. If you have a rather pricey bag, the return you’ll get on the deduction could more than cover the accountant’s fee (which is actually tax deductible too).

So next time you’re thinking about splurging on a new handbag, try and pick one that qualifies as a work expense. You could save yourself a some serious moolah.

Mia Steiber is Shopping and Beauty Expert at finder.com.au, the site that compares virtually everything.

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