Working from home can mean different things, so it’s important to understand your own set-up, and what that means for your tax return. If you work from home you may be able to claim a deduction for some of your expenses relating to the area you use, and the proportion of time you spend working there. Whether or not you have a dedicated work area or office, or a more informal set-up – for example your kitchen table being your part-time desk – can impact on what you’re able to claim.
Working from home and tax deductions – what you need to know
The following table sets out the deductions you may be able to claim if your home is not your principle place of business:
|Deductions you may be able to claim||You do have a work area||You don’t have a work area|
|Cost of using a room’s utilities such as gas and electricity||Yes||Yes|
|Work-related phone costs||Yes||Yes|
|Decline in value (depreciation) of office equipment such as desks, chairs and computers||Yes||Yes|
|Decline in value (depreciation) of curtains, carpets and light fittings||Yes||No|
|Occupancy expenses such as rent, mortgage interest, insurance and rates||No||No|
What is classed as ‘costs’ for running your home office?
- the cost of using a room (power costs for heating, cooling and lighting)
- business related phone costs
- the decline in value of plant and equipment (computer, printer, scanner etc.)
- the decline in value of furniture and furnishings (Tables, chairs, curtains/blinds, floor coverings, light fittings etc.) – if you have a dedicated work area
- the cost of repairs to furniture and furnishing used for your work
- cleaning costs
Tools to do your job
If you are an employee and required to use your computer, phone or other electronic device for work purposes, you may be able to claim a deduction for your costs.
If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of that cost.
If the tools are used for both work and private purposes you will need to apportion the amount you claim. If you have a computer that is used for private purposes for half of the time you can only deduct 50% of the cost.
The type of deduction you claim depends on the cost of the asset
- for items that don’t form part of a set and cost $300 or less, or form part of a set that together cost $300 or less, you can claim an immediate deduction for their cost
- for items that cost more than $300, or that form part of a set that together cost more than $300, you can claim a deduction for their decline in value.
Examples of tools, equipment or assets
- computers and software
- desks, chairs and lamps
- filing cabinets and bookshelves
- hand tools or power tools
- protective items, such as hard hats, safety glasses, sunscreens and sunglasses
- technical instruments.
You can also claim the cost of repairing and insuring your tools and equipment and any interest on money you borrowed to purchase these items.
If you use items for both personal and work-related purposes you need to keep records, such as a diary, so that, if requested, you can show how you apportioned the amount of private use and work-related use.
We can help you assess what you’re able to claim for based on your own individual circumstances. Contact Robertson Scannell for more information on our comprehensive services.