When working from home, it is important to know what you are eligible to claim at tax time and what percentage of that cost you are entitled to have returned. Even if your home office is not used entirely for work purposes, there are ways of calculating how much you should claim.
According to the Australian Taxation Office (ATO) website, things you will often use in a home office and that you may be eligible to claim include:
•The depreciation of home office equipment. This includes computers, telephones, printers and other devices. These items have a limited lifespan and the depreciation on these is therefore tax deductible. If you spend less that $300 on an item, you are able to claim a full deduction on the work related portion of that cost.
•Work-related phone calls. This includes calls from mobiles.
•Work-related phone line rental. For this, you must prove that either you are on call, or you are required to call your clients or workplace regularly when away from the workplace.
•Work-related internet charges.
•Costs related to heating, cooling or lighting. You can claim the amount over what you would normally spend if you did not work from home. Alternatively, through keeping a diary of these expenditures, you are able to claim up to 34.0 cents per hour on these costs.
•Repairs to home office furniture or fittings.
Keep in mind that working from home does not exclude you from claiming incidental costs you may incur, meaning, costs which may not be exclusive to those working in a home office. These may include subscriptions or memberships to professional associations, or professional seminars, workshops and courses.
In order to claim these expenses, certain records must be kept. These are:
•Receipts or proof of purchase for depreciating assets.
•Diary entries for small expenses. Small expenses are ten dollars or less, totalling no more than $200. Often these will be purchases you cannot prove, such as stationary.
•Telephone bills. Itemized bills on which work-related calls can easily be identified. Should you not have access to such bills, diary entries kept over a four week period is sufficient to make an estimate on costs over a financial year period.
It is important to keep written records of deductible items for five years. For depreciating assets, this figure is five years beyond the final claim made on the item.
Unfortunately, when working from home, you are not eligible to claim for occupancy expenses. These are things like rent, mortgage interest etc. You are also unable to claim on work-related items like laptops, printers and mobile phones if your employer has provided them, or even if your employer reimburses you for them either partially or entirely.
When keeping home office records, be as thorough as possible. The devil is in the details, and the more proof you have of tax-deductible purchases, the more you can claim.
Further detail can be found on the ATO website regarding precisely how much you can claim or you can try the Home Office Expenses Calculator online.