Work from Home? Do you know you can claim Home Office Expenses in Your Tax Return?

Share it now!
Many people aren’t aware that they can claim home office expenses. Whether you’re self-employed, a business owner or an employee - do you perform some of your work from home? If you do, here is a quick summary of the tax rules, and what home office expenses are allowed.

You may be able to claim a deduction for home office costs even if you haven’t set aside a place for your office." data-share-imageurl="">

Many people aren’t aware that they can claim home office expenses. Whether you’re self-employed, a business owner or an employee - do you perform some of your work from home? If you do, here is a quick summary of the tax rules, and what home office expenses are allowed.

You may be able to claim a deduction for home office costs even if you haven’t set aside a place for your office.

Some of Home Office expenses are:

  • Running expenses;
  • Telephone & Internet expenses;
  • Depreciation on equipment; and
  • Occupancy expenses.

When is a home a Place of Business?

The following factors, none of which is necessarily conclusive on its own, may indicate whether or not an area set aside has the characteristics of a place of business:

  • the area is clearly identifiable as a place of business;
  • the area is not readily suitable or adaptable for use for private or domestic purposes in association with the home generally;
  • the area is used exclusively, or almost exclusively, for carrying on a business; or
  • the area is used regularly for client or customer visits.

If you use your home to carry out income producing activities as a matter of convenience, you are not entitled to a deduction for occupancy expenses. It would be rare for an employee to be able to claim occupancy expenses.

Running expenses

A deduction can be claimed for home office running expenses such as electricity, gas and depreciation of office furniture (e.g. desk, tables, chairs, cabinets, shelves, professional library) in the amount of:

  • The actual expenses incurred; or
  • 45 cents per hour.

A claim cannot be made if no additional costs are incurred e.g. you work in your sitting room where others are watching TV, or the income producing use of the home is incidental e.g. 45c per hour would not be allowed for a fax machine permanently left on to receive documents.

You will need receipts for:

  • home office equipment used for work purposes
  • repairs relating specifically to the home office or furniture and equipment used for work purposes
  • cleaning expenses of home office
  • any other day-to-day running expenses for the home office
  • diary entries to record your small expenses ($10 or less) totaling no more than $200

Telephone & Internet expenses

If work or business calls can be identified from an itemised telephone account, then the deduction can be claimed for the work or business related portion of the telephone account. A representative four-week period will be accepted as establishing a pattern of internet and telephone use for the entire year.

Telephone rental expense may be partly deductible if you are “on call” or required to contact your employer or client on a regular basis.

Depreciation on Equipment

Depreciation on home office equipment including office furniture, carpets, computer, printer, photocopier, scanners, modem etc. used only partly for work or business purposes can be apportioned.

The claim is based on a diary record of the income related and non-income related use covering a representative four-week period.  The diary needs to show:

  • The nature of each use of the equipment
  • Whether that use was for an income producing or non-income producing purpose
  • The period of time for which is was used

Occupancy expenses

Claims for occupancy expenses are allowed only if the home is used as a place of business. Occupancy expenses include rent, mortgage interest, water rates, repairs, house insurance premiums.

The claim can be made as an apportionment of total expenses incurred on a floor area basis.

Warning: Being able to claim theses expenses may affect your ‘main residence exemption’ for capital gains tax purposes if you sell your house in the future.

Maximise your tax refund

Get in contact with us today so we can help you claim all possible home office expenses and maximise your tax refund. 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. 

Tax Block Accountants

45, Middlesborough Drive, Craigieburn VIC 3064

pH: +61 4232 288 166

 

Share it now!
Many people aren’t aware that they can claim home office expenses. Whether you’re self-employed, a business owner or an employee - do you perform some of your work from home? If you do, here is a quick summary of the tax rules, and what home office expenses are allowed.

You may be able to claim a deduction for home office costs even if you haven’t set aside a place for your office." data-share-imageurl="">