Working from Home? Don’t forget your home office deduction.
If you perform your work from home either part time or full time as part of your employment agreement or you are simply self employed, you maybe able to claim a deduction for the costs you incur in running your home office.
Methods of claiming
Diary method/actual running expenses
You will need to keep a diary to calculate how much of your running expenses relate to doing work in your home office. The diary needs to detail the time you spend in the home office compared with other users of the home office. Keep diary records for a representative four-week period. This would work out your business use percentage.
The expenses you can claim are
- Heating, cooling and lighting
- Decline in value (depreciation) of home office furniture and fittings
- Decline in value of office equipment and computer
- Computer consumables, stationery, telephone and internet costs claimed on an actual expense basis.
The following costs are not deductible as part of home office expenses
- Mortgage or interest costs
- Rates and taxes
- Depreciation on the home
- House insurance premiums
Tax Office rate per hour method
The Tax Office accepts a fixed rate of 34 cents per hour for home office expenses for heating, cooling, lighting and the decline in value of office furniture instead of keeping details of actual costs. You just need to keep a record of the number of hours you use the home office and multiply that by 34 cents per hour.
Prior to 1 July 2010, the rate was deemed to be 26 cents per hour.