As the workforce increasingly favours flexibility and a healthy work-life balance, companies throughout Australia (and indeed the world) offer their employees the chance to work from home; while others set up their own businesses to take greater control over their working lives. If you do find yourself working from home, either for yourself or for an employer, you may be able to legally reduce your taxable income by claiming certain deductions. Here are a few things to look for if this applies to you, as well as a few things you can’t claim.
Working from home
If your employer allows you to work from home, even for just a portion of your working hours, certain things are tax-deductible, for example, internet and phone usage. If you are planning on claiming this, remember that the ATO may ask you to prove that you actually did incur that expense, so make sure you are keeping a record of your real usage.
Tracking this usage can be done in a few ways. In the example of phone and internet usage, you could look at the time you spent making work calls and the data you used for work-related downloads as a portion of your total bill. Another way to do it is to complete a logbook or diary over 4 weeks to track how much you use those items, and then apply the work percentage over those 4 weeks to your annual expense. To put that into context, if you found that over a 4-week period your work used on your phone equated to 15% of total usage, you could claim 15% of your annual phone expense as a home office expense, assuming your circumstances are consistent across the tax year.
Home office expenses
Another common claim when working from home is for your dedicated work area (e.g. study or home office). The deduction you can make with this is for the running costs of your home, such as a portion of your electricity expenses; as well as the depreciation in value of equipment in that space (e.g. office chairs, printers).
Keep in mind that any claim you make can be for the work-related portion of the expense only. This means that if other members of your family use your home office, or you use it for personal activities as well, you may only claim a portion of the total expense. Running expenses can be claimed at 45c per hour (fixed rate) or as an actual expense.
The 45c per hour method requires you to keep a logbook over 4 weeks, as detailed above. If you are going to claim as an actual expense, you need to document the total expenses for lighting, cleaning, heating, and cooling for your home for the year, calculate the floor area of the relevant part of your home as a percentage of the total floor area, and then work out the percentage of the year that you used that part of your home exclusively for work.
Below is a quick look-up table to see what you may or may not be able to claim, depending on your work circumstances:
| Expenses | Home is a principal workplace with a dedicated work area | Home not principal workplace but has dedicated work area | You work at home but no dedicated work area |
| Running expenses | Yes | Yes | No |
| Work-related phone & internet expenses | Yes | Yes | Yes |
| The decline in value of a computer (work-related portion) | Yes | Yes | Yes |
| The decline in value of office equipment | Yes | Yes | No |
| Occupancy expenses | Yes | No | No |
If you have any questions about the above, need help with your tax or need advice, don’t hesitate to contact McKinley Plowman today on 08 9301 2200 or visit www.mckinleyplowman.com.au.
