Work-related home office expenses you can claim
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.
Sylvette uses her computer and personal internet account at home to access her work emails and review the online real estate websites. Sylvette uses her computer and the internet for work and private purposes.
Sylvette's internet use diary showed 40% of her internet time was for work-related activities and 60% was for private use. As her internet service provider charge for the year was $1,200 she can claim:
$1,200 x 40% = $480 as work-related internet use.
End of example
Note: A depreciating asset, such as a computer, is an asset that has a limited effective life and can reasonably be expected to decline in value over the time you use it.
For depreciating assets, you must keep records for a further five years from the date of your last claim for decline in value.
Keeping records of your home office running expenses
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, or expenses you cannot obtain any kind of evidence for, regardless of the amount - for example, stationery.
Working out your claim
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.
Anuja uses a diary to record the time she uses her home office for work purposes. Based on her diary entries, Anuja works out she spends an average of three hours each week night working in her home office. Anuja works for 38 weeks each year.
Anuja chooses to use the fixed rate of 45 cents per hour to work out the amount she can claim for her home office expenses.
Anuja calculates her home office running expense deduction as follows:
38 weeks x 15 hours x 0.45 cents = $256.50
End of example
Note: If you fill out your own income tax return, you claim your home office expenses at D5 Other work-related expenses on your income tax return.
Work-related home office expenses you cannot claim
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.