Are you claiming home expenses in tax?
You may be entitled to home office running expenses including telephone, internet, computer and software that you are required to use for the work. The requirement is that a nexus has to be established between the use and the income producing activities.
How you can claim deduction?
- Keep a diary of the details of your actual costs and your work-related use of the office, or
- Use a fixed rate of 45 cents per hour towards office heating, cooling, lighting and cleaning costs plus the depreciation of the home office furniture and equipment.
Please note that it is the home running expenses and not the occupancy expenses that you can claim as a deduction. Accordingly, you can’t claim a deduction for rent, mortgage interest, council rates and house insurance premiums.
Records you must keep
- You must keep records of home expenses, such as:
- receipts or other written evidence of your expenses, including receipts for depreciating assets you have purchased
- diary entries you make to record your small expenses ($10 or less) totaling no more than $200, or expenses you cannot get any kind of evidence for, regardless of the amount
- itemized phone accounts from which you can identify work-related calls, or other records, such as diary entries (if you do not get an itemized account from your phone company)
- A diary you have created to work out how much you used your equipment, home office and phone for business purposes over a representative four-week period.
Accountants at Lotus Smart make sure you take maximum advantage of home office deductions while following ATO’s compliance check list in this regard.