Carey Group Quarterly Newsletter
Work From Home Tax Deductions
The end of the financial year (EOFY) is a crucial period for your business. It’s time to finalise bookkeeping, file tax returns, and strategize for the upcoming financial year. Use this checklist to get organised, prepare your business, and enhance your efficiency for the year ahead.
Eligibility
To claim expenses related to working from home, you must:
- Engage in work from home to fulfil employment duties, rather than performing minimal tasks like occasional email checks or phone calls.
- Incur additional running expenses due to working from home.
- Maintain records demonstrating the incurrence of these expenses
Additional running costs
Running expenses concern the use of facilities within your home and are generally regarded as private and domestic costs. However, you can claim a deduction for additional running expenses incurred directly due to working from home. These additional running costs may encompass electricity or gas for heating, cooling, and lighting, home and mobile internet or data charges, mobile and home phone bills, as well as expenses for stationery, office supplies, and the depreciation of assets used for work, such as office furniture, computers, laptops, and software.
In certain circumstances where a dedicated home office exists, you might also be eligible to claim occupancy expenses like mortgage interest or rent, along with cleaning expenses. It’s important to note that if your employer provides an allowance to cover your work-from-home expenses, you must declare it as income on your tax return. For sole traders or business owners whose home serves as their primary place of business, specific deductions for home-based business expenses are available.
Choose a method to claim
As of 1 July 2022, two methods are accessible for calculating your claim:
- Revised fixed rate method:
- This method entails an amount per work hour for additional running expenses.
- It also includes a separate amount for expenses not covered by the revised fixed rate, such as the decline in value of depreciating assets.
- Notably, a dedicated home office is no longer necessary for this method.
- Actual cost method:
- With this method, you calculate the actual expenses you incur from working at home.
You must maintain records demonstrating the incurrence of expenses resulting from working from home. The specific records required will vary depending on the method chosen to calculate your expenses.
Expenses you can’t claim
You can’t claim a deduction for:
- Coffee, tea, milk and other general household items, even if your employer may provide these at work
- Costs that relate to your children’s education, such as equipment you buy – for example, iPads and desks, subscriptions for online learning
- Items your employer provides – for example, a laptop or a mobile phone
- expenses where your employer reimburses you for the cost.
For more information on working from home deductions, call our office on 4760 5900 or email info@careygroup.com.au
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