If you carry on all or part of your employment activities from home, then some portion of the home running expenses can be a tax deduction. Ideally, you should have a room set aside as a home office. Whilst you do not need to have a room set aside for your home office claim, if you are using a room with a dual purpose (e.g. dining room), or a room shared with others (e.g. lounge room) you can only claim the expenses for the hours you had exclusive use of the area.
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
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.
Tax Office rate per hour method
You can use a fixed rate of 34 cents per hour (updated for 2011 tax year) for home office expenses for heating, cooling, lighting and the decline in value of 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. Under this method you can also include the decline in value of office equipment (i.e. computers, faxes, etc.) but not furniture.
The following costs are not deductible as part of home office expenses:
- Mortgage or interest costs
- Rates and taxes
- Depreciation on the home
We have record cards available for you to use to keep the necessary records