Tax time: How to claim your home office

Modern workplaces have changed the work habits of many Australians. Traditional office jobs are turning into flexible work environments that allow employees to work from the comfort of their own home, and almost a third of Aussies are now regularly using their home as an office – which makes claiming this space as a tax deduction very important for a lot of us.

Claiming home office expenses can increase your tax return. Research from finder.com.au, which surveyed 2,005 people, found that over 30 per cent of us will be putting our tax return towards our savings, and your home office is another deduction that will keep more money in your own pocket (rather than the tax man’s), so why not make the most of it?

Here are a few things you should know about claiming your home office.

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Claiming tools & equipment.

If you purchase items such as computers, desks, chairs and calculators that are used to help you do your work and earn income from home, you may be able to claim part of their cost. The claimable amount will depend on how you use the equipment. For example, if you use your computer fifty-fifty for work and personal use, you’ll only be able to claim half its cost or decline in value.

Items, or sets of items costing less than $300, can be claimed as a cost deduction. However, if your items cost over $300, the deduction will be calculated based on a decline in its value. You can also claim repairs and insurance costs and the interest on loans used to purchase the equipment.

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Claiming running & occupancy expenses.

Performing work from your home office will come with associated expenses such as work phone calls, heating, cooling and lighting, repairs and cleaning costs. You can usually claim these as deductions.

Generally, individual employees won’t be able to claim occupancy costs such as rent, rates and mortgage interest. However, if you run your business exclusively from your home, these costs associated with owning or renting your house can be claimed. The ATO will calculate this, based on the proportion of your home that you’re using for business purposes.

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Organisation is key

When making a claim, the ATO will need evidence that you really are using your home office space for work purposes. This is why it’s important to keep track of all your receipts year-round. It’s a good idea to keep all receipts for home office expenses in a separate folder and keep a diary to log how often you use your equipment for work, for every four-week period. Don’t forget to also keep your phone bills, identifying all work-related calls and the costs of repairs and cleaning in your home office.

If you get caught out for not having adequate evidence to prove your home office claim, the ATO may hit you with a fine, so being organised will save you money (and stress)!

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Lodging your tax return

Before lodging your return, you may want to use the ATO’s Home Office Expenses Calculator to get an idea of how much you could claim for your home office. You can then lodge your own tax return online using MyTax (remember that since 2016 this has replaced ETax), or you can hire an accountant to do your tax for you. Whatever you decide, don’t forget that the deadline for lodging your tax return is 31 October.

The perks of working from home are all the better if you can claim your home office expenses as a deduction when the tax man comes knocking. With a little organisation and due diligence, you can make a big difference to the size of your tax return this end of financial year.

Written by:

Bessie Hassan

Bessie Hassan is a Money Expert at finder.com.au, the site that compares virtually everything. She regularly appears on national radio, TV, and throughout online publications sharing her best money-saving tips and property advice. She’s passionate about helping Australians make more informed decisions so they can improve their quality of life.