Working from home: What can I claim?

Everyone wants more tax deductions, particularly those tax deductions that do not incur an additional cost. That is, you will incur this cost regardless whether the expense is tax deductible or not.

For example, you own a motor vehicle you bought the car, you paid the rego insurance and petrol. Is it possible to claim part of those expenses as a tax deduction? The short answer is yes if you use it for business.

The expenses that I would like to discuss here are the expenses connected with working from home.

The typical expenses you can claim include;

  1. Home office running expenses
  2. Occupancy expenses
  3. Work related telephone/internet
  4. Depreciation of furniture and equipment used solely in the home office

Home office running expenses – if you have a dedicated work area such as a study set aside for work, the essential expenses to keep the work area running like electricity, cleaning, office equipment etc., can be claimed as an expense.

Running expenses can be claimed:

  1. at a fixed rate of 45 cents per hour – you will need to track either the actual amount of time you work from home or keep a log book over 4 weeks that can be applied to your expenses across the year.

or,

  1. as an actual expense – to claim an actual expense you need to document the total expenses for lighting, cleaning, heating and cooling for your home for the year, work out the floor area of that part of your home that you use for work as a percentage of the total floor area, and then work out the percentage of the year you used that part of your home exclusively for work.

Occupancy expenses – expenses such as rent, interest on your home loan, property insurance, land taxes and rates can only be claimed if your home is your ‘place of business’ and no other work location has been provided to you. A place of business is unsuitable for any other use other than business, like a doctor’s surgery connected to a home. Occupancy expenses can be claimed by calculating your total expenses × floor area × percentage of year that part of your home was used exclusively for work. Generally, occupancy expenses are not a deduction available to employees.

Work related phone and internet expenses – you can claim up to $50 for phone and internet expenses without substantiating the claim, or you can work out your actual expenses. Claims for actual expenses can be made by working out the work-related use of the phone and internet and then applying that percentage to the expenses.

Depreciation – depreciation of your furniture/home office equipment and computer if these items are used for work purposes. If you choose this method you cannot also use the 45c per hour method mentioned above.

Summary

The table below summarises what you are entitled to claim

Expenses Home is principal workplace with dedicated work area Home not principal workplace but has dedicated work area You work at home but no dedicated work area
Running expenses Yes Yes No
Work-related phone & internet expenses Yes Yes Yes
Depreciation in value of a computer (work related portion) Yes Yes Yes
Depreciation in value of office equipment Yes Yes No
Occupancy expenses Yes No No

Source: Australian Taxation Office

Should you require further information regarding home office tax deductions, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166.

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.  It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.   

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