Many of us work from home, be it full time or a side gig. Did you know that you can claim some office expenses at tax time?
If you work from home for a regular job you may also be able to claim a deduction.
You may be entitled to claim deductions for home expenses including a computer, phone or other electronic devices you are required to use for work purposes, as well as a deduction for running costs.
You may be able to claim running costs for equipment including computers, printers and telephones. Heating, cooling and lighting may also be included.
Repairs to your home office furniture and fittings and even cleaning of the home office, phone calls and internet expenses may also be claimed. Any consumables used may be claimed on an actual cost basis.
A percentage of rent or mortgage payments may be claimed if your home office is your principle place of business.
What is a Home Office?
A home office is a dedicated place to work at home. A dedicated place may be a table or desk but can not be in the main living area if other people are home. If you sit at the kitchen table to work, it is a dedicated place to work, but if you sit on the couch while the kids are watching TV, it is not a dedicated place to work. If you sit in the lounge room while no-one else is there, it can be a dedicated place to work.
The best thing to do is set up a desk in a place in the house that is only used for working.
Ways to calculate office expenditure for Taxation
If you have an area specific for business use such as a dedicated office, or work area eg. Hairdressing Salon or Photography studio, you can use a percentage of the floor area.
Where you do not have a specific business area, you can keep a diary for hours worked.
Actual running expenses.
Actual running expenses can be hard to calculate but is made easier by using hourly costs per appliance
I found this calculator from the SA government that calculates appliance running costs. The amount of running costs are based on your home office percentage rate.
Rate per hour
A simpler calculation is the rate per hour that the ATO mandates, currently 45c an hour.
Again the amount of costs are taken from your home office percentage rate.
Records to keep
The ATO requires records to be kept to prove home office expenditure. A diary over a minimum of four weeks should be kept. Diary entries need to record the time spent working. the percentage of the time of home use can then be applied to expenses. You will also need to keep all household bills.
Feel free to download this Home office expenses calculator to help with calculating your Home Office Expenses
Taxation is complex and it is always best to seek the advice of a tax agent. I am offering a free 15 minute consultation to assess if I am the right tax agent for you.