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Working from home: What deductions can you claim?
Technology in the 21st century has broadened the work space for many people. Where an employee puts in additional working hours in their home or where a home office has been set up, the Australian Taxation Office (ATO) is of the view that not all expense claims made are legitimate deductions.
As an employee performing extra work at home like emailing in the evening, spending a day at home working on a presentation or a few hours at home making phone calls, you may not claim a deduction for occupancy of your home. Items such as rent, property rates and insurance are non-deductible, as are costs related to a mortgage.
However, if you run a home office as your primary place of business, then those occupancy costs may be claimed and you are encouraged to heed professional financial advice about which costs in your particular live/work situation are valid.
Any work conducted at home incurs running costs and running costs such as electricity, cleaning, stationary, office equipment and/or depreciation thereof, as well as phone/internet usage are all deductible expenses. Now, it is highly likely that not all the cost incurred may be claimed. Where there is personal and professional use of an item, only the work-related portion of the total cost is allowed to be claimed.
|Expenses||Home is principal workplace with dedicated work area||Home not principal workplace but has dedicated work area||You work at home but no dedicated work area|
|Work-related phone & internet expenses||Yes||Yes||Yes|
|Decline in value of a computer (work related portion)||Yes||Yes||Yes|
|Decline in value of office equipment||Yes||Yes||No|
Determining work-related expenses can be done using the ATO’s home office expenses calculator at https://www.ato.gov.au/calculators-and-tools/home-office-expenses-calculator/
Remember – Keep evidence of your work-from-home expenditure
Potential tax deductions are only claimable with the relevant and accurate proof of usage. Consider keeping such evidence as a detailed phone bill, purchase receipts and/or a diary of actual periods of an item’s usage within the home.
Being aware of what you may and may not claim as a deductible expense is especially prudent, given the ATO’s grasp on the 21st century worker’s flexible working life.
How can YML help?
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your work-from-home expense claims. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.