In a world where commutes are measured in steps rather than kilometres, working from home has become the new norm (be it as a hybrid role or full-time).
While this shift means far fewer traffic jams or rush hour woes, it can bring a different kind of headache into your life: figuring out how to claim tax deductions for your home office.
Don’t worry; we’ve got you covered with everything you need to know to turn those home office expenses into a financial win on your tax return.
How to I know if I’m eligible to claim?
To claim a deduction, you must:
- Be working from home to fulfil your employment duties, not just occasionally checking emails or taking calls.
- Incur additional expenses as a result of working from home.
How do I calculate a deduction?
There are two methods that can be used to calculate a work-from-home deduction.
- Fixed rate method:
- Rate: 67 cents per hour.
- Covers: Electricity, gas, phone usage, internet, stationery, and computer consumables.
- Records: Keep a diary of hours worked from home.
- Actual cost method:
- Calculates: Direct costs such as a portion of electricity, phone, and internet.
- Records: Detailed records and receipts are required.
What could be considered a home office expense?
- Running expenses
These include costs for heating, cooling, lighting, and cleaning dedicated work areas.
- Depreciation of equipment
You can claim depreciation for equipment and furniture used for work purposes. For items costing up to $300, an immediate deduction can be claimed.
- Occupancy expenses
These are typically not deductible unless your home office is your principal place of business.
What else do I need to do?
- Private vs. work use: You can only claim the work-related portion of your expenses.
- Proof of expenses: Maintain meticulous records of all expenses, including receipts and usage diaries.
Claiming home office deductions can be complex, but with proper documentation and an understanding of the available methods, you can ensure you’re maximising your tax return.
Always consult with a tax professional if you’re unsure about the specifics of your situation. Why not speak with us to learn how we could help you on your tax journey?
