Question: What home office tax deductions can I claim? (Australian Residents)
Answer: In Australia the tax system looks at different factors for allowing home office tax deductions.
- Running expenses - electricity, cleaning supplies, depreciation of office equipment is based on a floor area basis.
- Occupancy Expenses - mortgage interest, rent, rates and insurance are based on floor area and time.
Having a home office means that running expenses can be claimed but occupancy expenses cannot be claimed as those expenses would still exist even if the home office is not there.
Occupancy expenses can only be claimed if someone has added room or space to run a business from their home. This would not be applicable to employees of a company or most freelancers.
The norm for deductions in Australia is to allow for expenses such as electricity and decline in value of office furniture.
You must keep all copies of receipts and invoices for all items and expenses related to your home office.