The do’s and don’ts of claiming home office expenses

Man Working In Home OfficeSssshhh, can you hear that? That’s the sounds of the home office a.k.a mega productivity, peace and quiet, comfort and silence!

Home (office) is where the heart is

Studies show remote or home-based workers are more productive, better for the environment (no travel emissions), are happier and healthier (have less sick days and less time off) and churn out quality work because it is nice and quiet and un-interrupted.

Best of all, if you are self-employed (a contractor, sole trader, in partnership or own a company) and you work in your home office, there are some home expenses you can claim through your business.

It’s all about the space

When you use an area of your home for your business you can claim a portion of the household expenses such as rates, power, house and contents insurance, mortgage interest if you own the home, or rent if you are renting the home.

But it’s all about the space. The amount you can claim depends on the actual measurement of the space allocated for business use. For example if your home is 120 square metres and you use 12 square metres for work — so 10 per cent of the total area — you can claim 10 per cent of expenses!

You can check out this handy MBIE graphic as a guide.

What’s in, what’s out?

You can claim 100% of expenses that are solely for business purposes. For the rest, you can claim the proportion of your house that you use for work; in this example, 10%. Here are some other examples:

  • It includes things like toilet paper and power but not things like food and furniture.
  • If you have a separate landline for business, 100% can be claimed.
  • 100% of office supplies and, of course, business mobile costs can be claimed.
  • For subscriptions, 100% of business magazine subscriptions can be claimed but zero per cent of TV or streaming subscriptions can be claimed.

Of course, as usual you will need to keep invoices or a record of these expenses.

Some things to note

If you do not have a separated or allocated space for your home office you will need to take into account how much time you spend on your business and how much space you use. This means if you are sitting at the kitchen counter or have a desk in the garage or rumpus room.

If you are GST registered, the GST on home office expenses can be claimed as they are being paid, in each GST return period, or at the end of your tax year. But remember mortgage interest and rent don’t include GST.

So it seems working from home is a win win win. Get more done, stay happy and healthy and claim a little of your expenses along the way. If you are not sure about how much you can claim, talk to your friendly accountant or check out a bit more information in this video.

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