If you have a home office or run a home-based business, you may be able to claim:
· Occupancy Expenses
· Running Expenses
Occupancy expenses are the costs of owning/renting your home and may include rent or interest on your mortgage, rates, land tax and house insurance. Generally, only people that run their own home-based business can claim occupancy costs (that is, employees generally cannot claim these costs).
To claim occupancy costs, you must pass the interest deductibility test. This test requires that the area you have set aside in your home must have the character of a place of business. Some of the indicators that need to be considered are:
· Clearly identifiable as a place of business eg signage
· Not readily suitable to be used for private or domestic purposes
· Exclusively (or almost exclusively) used for carrying on your business
· Regular client visits to your office.
Please note that should you own your home, there may be capital gains tax implications.
Running Expenses are costs of running your home office and may include electricity and gas, phone, depreciation of plant, equipment and furniture, and repairs to the depreciable items. There are two ways to calculate your running expenses:
· Fixed rate per hour – for the 2019 financial year the rate is 52 cents per hour and may change for future years; or
· Calculate your actual expenses based on the floor area of the part of your home that is used for work as a percentage of the total floor area.
For more information please refer to this ATO prepared summary https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/Working-from-home.pdf or visit their website for more information.
Alternative, please feel free to contact our office and discuss with one of our experienced accountants.