World has changed, so does the working environment. With many employees putting in extra hours in the evening and at weekends, and many employers moving to flexible working where an office space isn’t necessarily provided, it’s becoming increasingly common for people to work either partly or wholly from home.

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If you’ve set up a home office (a separate area for your income generation activities) in your study or converted a spare bedroom into a work space, you need to be aware of the potential tax deductions you can claim when you come to complete your next tax return. Here’s my list of the top five deductions you could be eligible for.

Heating, cooling and lighting bills

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You must be spending to heat your home office in the winter and keep it cool during the summer. And obviously you need light to see what you’re doing! That means that you can claim a proportion of the various household utility bills which relate to the time you spend working in your home office. You can’t claim for periods where the home office space is being used for other purposes and nor can you claim for the element of your bills that relates to the rest of your home. 

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Depreciation charge for home office furniture & fittings

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If you furnish your home office with desks, shelving and cupboards, you can claim a deduction for the decline in value of that furniture to the extent that it relates to your work activity. That’s likely to lead to a write-off of the cost over a period of effective life of the asset.

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Depreciation of office equipment and computers

 

You can depreciate below items over their life and claim a deduction each year for the work-related element. 

• Computers

• Laptops

• Tablets

• Mobile phones

• Printers

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Low-cost capital items

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Capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated). That could include some of the cheaper tablets and mobile phones, as well as many printers. 

Other claimable instances 

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Make sure you claim for the work-related proportion of other costs such as:

• Computer consumables (like printer ink)

• Stationery

• Telephone and internet costs

• Cleaning costs

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What you can’t claim
 

Many people try to claim a percentage of rent or the interest on a mortgage if they work from home using a home office. This isn’t allowable.

 

Two methods to make your claim

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Ideally, you should have a specific room set aside as a home office. If you are using a room with a dual purpose or a room shared with others you can only claim the expenses for the hours you had exclusive use of the area.

There are two methods you can use to calculate a claim.

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Actual running expenses

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Keep a diary to work out how much of your running expenses relate to doing work in your home office or other workspace. The diary needs to detail the time you spend in the home office compared with other users of the home office. Keep your diary record for a representative four-week period. The ‘work-use proportion’ you come up with over that four week period can then be applied to all your actual expenditure over the course of the year. Of the two methods this usually produces the larger deduction but the record-keeping requirements are more stringent.

You’ll also need to work out how big your home office is compared to the rest of your house (using floor area as a guide). This will enable you to work out the split between costs which relate to the office and costs which are domestic in nature.

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Rate per hour method

You can use a fixed rate of 45 cents per hour 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 45 cents per hour.

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Finally, it is always advisable to contact us to find out how you can boost your claim.!

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