Claiming a tax deduction for expenses for a home-based business

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Media: Claiming deductions – home-based business expenses
http://tv.ato.gov.au/ato-tv/media?v=bi9or7onhhq133External Link (Duration: 01:12)

If you operate some or all of your business from your home, you may be able to claim tax deductions for home-based business expenses in the following categories:

occupancy expenses (such as mortgage interest or rent, council rates, land taxes, house insurance premiums)
running expenses (such as electricity, phone, decline in value of plant and equipment, furniture and furnishing repairs, cleaning)
the expenses of motor vehicle trips between your home and other locations, if the travel is for business purposes.

For a summary of this content in poster format, see Home-based business expenses (PDF, 438KB)This link will download a file

From 1 March 2020 to 30 June 2021, you have the option of a temporary shortcut method. This is similar to the fixed rate but with a higher rate of 80 cents an hour for each hour that you operate your business from home. It is an all-inclusive rate so you can’t separately claim running expenses using any other methods.

When you sell your home, you may have to pay capital gains tax (CGT). It's important to keep the right records to work out your deductions or CGT.

If you’re entitled to goods and services tax (GST) input tax credits, you must claim your deduction in your income tax return at the GST exclusive amount.

On this page:

What a home-based business is
Type of business structure

See also:

Working from home during COVID-19

What a home-based business is

A home-based business is one where your home is also your principal place of business. That is, you run your business at or from home, and have a room or space set aside exclusively for business activities.

A home-based business can be run:

at home – that is, you do most of the work at your home. An example is a dressmaker who does all their work at home, with clients coming to their home for fittings.
from home – that is, your business doesn't own or rent a separate premises. An example is a tiler who does all their work on clients' premises but does all their record keeping, and stores all their tools and supplies, at home.

If your home is not your principal (or main) place of business but you do some work from home, you may still be able to claim a deduction for some of your expenses relating to the area you use.

Examples of businesses that can be home-based
Industry	Occupation
Accommodation, cafes and restaurants	Bed and breakfast operator, caterer, campground owner
Agriculture, forestry and fishing	Shearer, market gardener
Communication services	Mail service provider, web designer, desktop publisher, graphic designer
Construction	Bricklayer, plumber, carpenter, tiler, fencer, electrician, builder, engineer, draftsperson, cabinetmaker, woodworker
Cultural and recreational services	Film editor, sound recordist, artist, musician, piano tuner
Education	Tutor, lecturer, music teacher
Finance and insurance	Financial adviser, consultant, accountant, bookkeeper, insurance broker
Health and community services	Dietician, chiropractor, counsellor, physiotherapist, psychologist, massage therapist
Personal and other services	Personal trainer, photographer, hairdresser, beautician, child-minder, dressmaker, event manager, cake decorator, jeweller, pet groomer
Property and business services	Plant hire or leasing operator, architect, surveyor, interior decorator, house painter, cleaner, gardener, service and repair operator, sign-writer, tree lopper
Transport and storage	Courier, freight carrier, removalist
Wholesale and retail trade	Fresh fruit wholesaler, confectionery supplier, florist, watchmaker, party-plan operator, telemarketer

Type of business structure

If you carry on a home-based business, you need to use the right method to calculate your expenses based on your business structure.

Next steps:

Find out about:

Motor vehicle expenses for a home-based business

Last modified: 02 Jun 2021QC 33864