Tax-deduction tips for a home office

By Irene Chong

Between the volumes of tax legislation, Australian Taxation Office (ATO) publications and rulings - not to mention the product advertisements promising a tax deduction for end of financial year sale purchases - it can be difficult to figure out the tax deductions for your home office. But whether it's big or small, every tax deduction counts towards business savings, so it's worth looking into all the options. Here are some tips to help.

What can you get a tax deduction for?

If you operate your business from home, it's likely you will be able to claim a tax deduction for a proportion of your running costs, such as phone line rental, internet costs, office furniture, computers, printers, air conditioners, lighting and cleaning expenses.

What about occupancy costs such as rent, home insurance, repairs and maintenance, interest on your mortgage, council rates and property taxes? You may be able to claim tax deductions for a proportion of occupancy cost if your home office is considered a place of business.

In assessing whether or not your home office is a place of business, you need to think about whether it could be defined as:

  • Clearly identifiable as a separate business area.
  • Usable only for business, or can be readily adapted from business use to general domestic use.
  • Used exclusively for business.
  • Regularly visited by clients or customers.
  • Needed to conduct your business.

For example, a place of business would include a self-employed writer using one room of a flat for writing, meetings with publishers and interviews with experts. This can be contrasted with an insurance agent who maintains client files and occasionally interviews a client in the home office, but does the majority of their work selling insurance to clients with meetings taking place at the client's office.

How much can I claim?

It's only fair that you get to claim a deduction for the proportion that reasonably relates to your business activities. So you might calculate the rent expense based on the floor area of the home office and other expenses based on time spent working for the business versus using the facilities for personal matters.

The ATO has a guide containing information on calculating the tax deductions for home office expenses, keeping records and what happens if you sell your home in the future (there maybe some capital gains tax consequences you need to consider).

So look away from your screen for a second at the space around you. Does this space qualify as a home office? Have you claimed a tax deduction for everything that you can in it? Write a list and add up the costs for your tax deductions, because every tax deduction, whether it's big or small, counts towards your tax savings.

*This article does not constitute financial or financial product advice, and you agree not to rely upon this article in any way.


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