You may be entitled to claim deductions for home expenses including a computer, phone or other electronic devices you are required to use for work purposes, in addition to a deduction for running costs.
Employees generally can’t claim a deduction for occupancy expenses including rent, mortgage interest, council rates and house insurance premiums.
Claiming phone, a computer or other electronic device as a work-related expense
An employee who is required to use his computer, phone or other electronic device for work purposes may be able to claim a deduction for these costs in his tax return.
If you do some of your work from a home office, you may be entitled to a deduction for the costs you incur in running this home office, including:
– for home office equipment, such as computers, printers and telephones, the cost (for items costing up to $300) or decline in value (for items costing $300 or more)
– work-related phone calls including mobiles and phone rental (that portion reflecting the share of work-related use of the line) if you can show that you are on call, or required to phone the employer or clients regularly while you are away from your workplace
– heating, cooling and lighting
– the costs of repairs to home office furniture and fittings
– cleaning expenses.
Home office expenses records requirements
– expenses receipts or other written evidence including receipts for depreciating assets you have purchased
– diary entries you make to record your small expenses ($10 or less) totalling no more than $200, or expenses you cannot get any kind of evidence for, regardless of the amount
– itemised phone accounts from which you are able to identify work-related calls, or other records, such as diary entries (in case you do not get an itemised account from your phone company)
– a diary you have recorded to work out how much you used your equipment, home office and phone for business purposes over a representative four-week period.
Check out the table below for the expenses you can claim in addition to the three ways you can work at home, which include:
– home is your principal place of work and you have a dedicated work area that is not for for domestic use
– home is not your principal place of work but you have a dedicated work area – for example a study room
– you do work at home without a dedicated work area – for example you use a room with a dual purpose such as a lounge room.
Home office expenses you can and can’t claim
If home is principal workplace with dedicated work area : Running Expenses, Work-Related Phone & Internet Expenses, Decline in Value of a Computer (work related portion), Decline in Value of Office Equipment, Occupancy Expenses
If home not principal workplace but has dedicated work area : Running Expenses, Work-Related Phone & Internet Expenses, Decline in Value of a Computer (work related portion), Decline in Value of Office Equipment
If you work at home but no dedicated work area : Work-Related Phone & Internet Expenses, Decline in Value of a Computer (work related portion)
More about Running Expenses
Running expenses are the increased costs of usage within your home because of your business activities.
To claim a tax deduction, you are required to work out the portion of the expense that relates to business use as opposed to private use.
There are many options for working out your claim for running expenses.
What are running expenses?
Running expenses include:
– the expenses of using a room, such as electricity and gas costs for heating, lighting and cooling
– business phone and internet expenses
– the decline in value of plant and equipment, such as chairs, bookcases and computers
– the decline in value of furniture and furnishings such as curtains, carpets and light equipment
– the expenses of repairs to furniture and furnishings
– cleaning costs.
How much you can claim
Using your floor area is one way of working out some running expenses. If the floor area of your home office is 10% of the total area of your home for example, you can claim 10% of heating expenses.
If you do not have an area of your home set aside exclusively for business purposes, you cannot claim on a floor area basis as this area is also used for non-business purposes. In this case, you are required to show how you arrived at the amount you are claiming. How you work out these additional costs is up to you, for example you may compare accounts from before and after you started business to measure increased costs.
In all cases you are required to provide information to show:
– your claim is acceptable
– you have excluded the private (domestic) proportion of expenses associated with living costs.
ATO also accepts the following methods for working out how much of your expenses are for business purposes.
Keeping a diary
You can keep a diary showing how you used your home work area for a representative four-week period each financial year to work out a pattern of use for the home work area for the entire FY.
You are required to keep a diary for each financial year.
Claiming 45 cents per hour
If you do not record actual expenses for heating, cooling, lighting and furniture depreciation, you are able to claim a deduction of 45 cents per hour based on the actual use or an established pattern of use.
This rate is calculated on average energy expenses and the value of common furniture items used in home business areas.
You are required to separately work out all other home work area expenses, such as phone expenses and depreciation on computers or other equipment.
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