In doing so, we may incur expenses which directly relate to the earning of income, and may be deductible when lodging our tax return.
There is one important difference in claiming “home office” type expenses…and that relates to the difference between running costs and occupancy costs…and whether or not you are an employee or are earning business income.
Depending on your circumstances. you may be entitled to claim a tax deduction for home office expenditure:
- As an employee, running costs may be deductible, however occupancy costs are generally not deductible
- Business owners who run some or all of their business from home and have an area set aside and used exclusively for business purposes, may be entitled to a deduction for both running and occupancy costs
Running costs relate to expenses such as light and power, repairs to office furniture, telephone calls and rental, cleaning expenses and home office equipment (such as computers, printers and telephones).
Occupancy costs relate to expenses such as rent or mortgage interest, council rates and premiums for home insurance.
There is a great calculator on the Australian Taxation Office (ATO) website which can help you determine if you meet the criteria for claiming a deduction for home office expenses, you’ll find it here. Alternatively, your accountant can assist you in calculating your eligible deduction.