If you work from home, you may be eligible to claim a tax deduction for expenses related to your work, including:
- Heating, cooling, and lighting bills
- Costs for cleaning your home workspace, including cleaning products or payments for a domestic cleaner if needed.
- Depreciation of home office furniture and fittings
- Depreciation of office equipment and computers
- Costs for repairing home office equipment, furniture, and furnishings
- Small capital items like furniture and computer equipment costing less than $300 can be written off immediately, without depreciation.
- Computer consumables, such as printer ink, and stationery
- Phone expenses (mobile and/or landline) and internet expenses
How to Claim?
Starting from July 1, 2022, a revised fixed rate method is available for claiming expenses. This method allows you to claim a fixed rate of 67 cents per hour, covering:
- Energy expenses (electricity and gas)
- Phone usage (mobile and home)
- Internet
- Stationery and computer consumables
If you choose this method, you cannot claim additional deductions for expenses covered by the rate. Phone usage and internet expenses are now included in the fixed rate method, whereas they were previously separate deductions.
For expenses not covered by the fixed rate, you can still claim them separately, such as:
- Depreciation of assets used for work, like computers and office furniture
- Repairs and maintenance of these assets
- Cleaning expenses for a dedicated home office
Compliance and Substantiation
Under the fixed rate method, you must keep a record of all hours worked from home for the entire income year, starting from March 1, 2023. Before this date, a 4-week representative diary or similar document is required for the period from July 1, 2022, to February 28, 2023. The ATO does not accept estimates or representative diaries for periods after March 1, 2023. These records can be in various forms, such as timesheets, rosters, logs, or a diary for the entire year.
For the actual cost method, you need detailed records for all home office expenses, including receipts, bills, and documents to prove the expenses, as well as a record of the hours worked from home and calculations for work-related and private portions of expenses.
Rent and Mortgage Interest
“Occupancy expenses” like mortgage interest (for homeowners), rent, rates, and home insurance cannot be claimed unless your home is your place of business. If you run your business from home or use it as a base for administrative work, storage, etc., a portion of your occupancy costs may be eligible for deduction. However, running a business from home might affect the Capital Gains Tax exemption for that part of your home.
What Can I Claim?
The below summarizes deductions based on how you work from home:
- Home is your place of business or work and you have a home work area: You can claim occupancy expenses, running expenses, business phone costs, and depreciation.
- Home is not your place of business but you have a home work area: You can claim running expenses, business phone costs, and depreciation.
- You work at home but don’t have a home work area: You can claim running expenses, business phone costs, and depreciation, except for depreciation of items like curtains, carpets, and light fittings.
How Much Can I Claim?
There is no maximum limit for your claim, as long as it adheres to the rules and you have the necessary documentation to support your deductions.
