Home office expenses
If you perform some of your work from your home office, you may be able to claim a deduction for the costs you incur in running your home office, even if the room is not set aside solely for work-related purposes.
You may be able to claim:
- the decline in value (depreciation) of home office equipment, such as computers and telecommunications equipment – if your equipment costs $300 or less, you can claim a full deduction for the work-related portion
- the cost of heating, cooling and lighting your home office that is over the amount you would ordinarily have to pay if you did not work from home
- the costs of repairs to your home office furniture and fittings.
What you cannot claim – occupancy expenses
Occupancy expenses include rent or mortgage interest, council rates and house insurance premiums. You can only claim occupancy expenses where your home office is considered to be a place of business. If your only income is paid to you as an employee, you are generally not able to claim a deduction for your occupancy expenses.
Keeping records of your home office running expenses
To claim a deduction for the electricity and gas you use and the decline in value of your office furniture, you can claim either of the following:
- a deduction for your actual expenses
- a deduction you work out at a rate of 45 cents per hour.
To use the 45 cents per hour method of claiming, keep a diary to record the amount of time you use your home office for work purposes. The diary must show a representative period of at least four weeks to establish a pattern of use for the whole year.
Daniella uses a diary to record the time she uses her home office for work purposes. Based on her diary entries, Daniella works out she spends an average of three hours each week night working in her home office. She works for 38 weeks each year.
Daniella chooses to use the fixed rate of 45 cents per hour to work out the amount she can claim for her home office expenses.
She calculates her home office running expense deduction as follows:
38 weeks x 15 hours x 0.45 cents = $256.50
End of example
The records you must keep may include:
- receipts or other written evidence of your expenses, including receipts for depreciating assets you have purchased – for example, your computer
- diary entries you make to record
- your small expenses ($10 or less) totalling no more than $200
- expenses you cannot obtain any kind of evidence for, regardless of the amount – for example, stationery.
You claim your home office expenses at D5 - Other work-related expenses on your income tax return.
Tools and equipment
You can claim an immediate deduction for tools or equipment that you use for your work where the cost does not exceed $300, if:
- it does not form part of a set, or
- it forms part of a set, but the set cost is $300 or less.
If your tools or equipment cost more than $300, you can claim a deduction only for the decline in value (depreciation). The amount you can claim for decline in value (or as an immediate deduction) depends on the amount of time you use your tools or equipment for work purposes – for example, if you bought a power tool for $350 which you use half for work purposes and half for private purposes, you can claim only half the decline in value.
You can also claim the work-related cost of repairing and insuring your tools and equipment, and any interest charges you incurred on money you borrowed to purchase these items.
If you received a tools allowance of $500, and your tool expenses were $300, you would:
- include the whole amount of the allowance as income on your tax return, and also
- claim a deduction of $300 for the expense incurred.
End of example
You can claim a deduction for the cost of work-related phone calls you make, including calls from mobile phones. You can also claim a deduction for your phone rental if you can show you were on call or you had to call your employer or clients regularly while you were away from your workplace.
If you also used your phone for private purposes, you can only claim that portion of your phone rental costs and calls that relate to your work-related use of the phone – see example 13.
Note: If you are reimbursed for part or all of your phone expenses, you cannot claim a deduction for that portion.
Keeping records of phone expenses
You may be able to identify your work-related calls individually on your itemised telephone account. If you do not receive itemised accounts, you can make a reasonable estimate of your call costs based on diary records you have kept over a minimum four-week period, together with your relevant telephone accounts.
Angelo uses his mobile phone for work purposes. He is on a set plan of $49 a month and rarely exceeds the plan cap.
Angelo receives an itemised account from his phone provider each month by email, which includes details of the individual calls he has made.
At least once a year, Angelo prints out his account and highlights the work-related calls he made. He makes notes on his account for the first month about who he is calling for work – for example, his site manager.
Out of the 300 calls he has made in a four-week period, Angelo works out that 30 (10%) of the individual call expenses billed to him are for work, and applies that percentage to his cap amount of $49 a month. The other two months that Angelo reviews are consistent with this.
Since Angelo was only at work for 46 weeks of the year (10.6 months), he calculates his work-related mobile phone expense deduction as follows:
10.6 months x $49 x 10% = $52
End of example
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For more information, phone us on 13 28 61 from Monday to Friday, between 8.00am and 6.00pm. We can offer you a more personal service if you provide your tax file number (TFN).
If you do not speak English well and need help from us, phone the Translating and Interpreting Service on 13 14 50.
If you are deaf, or have a hearing or speech impairment, phone us through the National Relay Service (NRS) on the numbers listed below:
How to work out which common work-related expenses you can claim.
- TTY users – phone 13 36 77 and ask for the ATO number you need
- Speak and Listen (speech-to-speech relay) users – phone 1300 555 727 and ask for the ATO number you need
- internet relay users – connect to the NRS on relayservice.com.auExternal Link and ask for the ATO number you need.