In this article we’ll explore the types of expenses you can claim whilst operating a business from home and we’ll touch on how your business structure can affect your entitlements and obligations when claiming deductions for your home-based business expenses.
If you run your business from home, you may be able claim the business portion of some of your expenses.
These can include:
- Mortgage/Rent Repayments
It can be tricky to know what you're entitled to claim and the types of expenses you can claim depends on how your business is operated out of your home. It’s also good to note that you can only claim deductions for the portion of expenses relating to the running of your business.
Sole traders & partnerships
If you are a sole trader or partnership, there are two types of expenses you may be able to claim for:
- Running expenses such as:
- Heating, cooling & lighting
- Cleaning costs
- Landline phone & internet
- Depreciation of your business furniture & equipment
- Repairs to furniture & equipment
- Occupancy expenses such as:
- Mortgage interest or rent
- Council rates
- Land taxes
- Home and contents insurance
Trusts & companies
To determine which expenses the business pays for and can claim as a deduction, the business needs to have a genuine, market-rate rental contract (or similar agreement) with the owner of the property. There may be tax implications for you and your business if you don’t have a genuine rental contract in place.
If you run your business from home but are the employee and the business pays for or reimburses you for, you can’t claim a deduction for the expenses in your individual income tax return. Rather, your business will be subject to fringe benefits tax (FBT).
Certain exemptions and concessions may reduce your FBT liability.
The ATO has put together a more in-depth fact sheet to explain the above information in more detail. You can download it here: Click to download
If you have any further questions, we encourage you to consult with a registered tax agent.
Senior Tax Manager