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April 12, 2019

Claiming a tax deduction for home office, phone and office fit out expenses

Small Business, Tax Deductions, Women in Business

If you work from home you can claim a tax deduction of 52 cents per hour you use the office for work purposes (45 cents per hour for the years prior to 30 June 2018) to cover the cost of electricity, cleaning, lighting etc.  Simply estimate the number of hours worked per week multiply by 52 cents multiply by number of weeks worked, which is usually 48, being 52 weeks less 4 weeks annual leave.

 

Another option to claim home office costs, is to calculate the percentage of your work area in relation to the rest of your home and multiply this by your electricity and cleaning bills.  For example, if your home office is 1/5th of the house area, you could claim 1/5th of the electricity and cleaning bills as a tax deduction.  This figure needs to be reduced to the extent your home office is used by the rest of the family.  For example, if your child uses the home office to study, you would need to adjust the portion of electricity and cleaning for private use.

 

You can also claim the cost of any assets used in the office.  Any assets for an individual under $300 or for a small business under $30,000 ($20,000 in 2018) are 100% deductible in the year of purchase.  Any assets over these thresholds, are depreciated over their useful life to the extent they are used for income producing purposes.  For example, if you purchase a laptop for $2,000 and you are a small business, this is immediately deductible in full, to the extent it is used for business.  However, if you are an employee, then the laptop is deductible over 3 years, again to the extent it is used for business.

 

Telephone and internet expenses incurred to generate taxable income are deductible.  You can claim $50 with limited documentation and to claim any amount above $50 you must keep a diary for one month every year, to determine the business portion.  A diary of use will suffice.  To substantiate your claim, you can mark a phone bill to determine personal calls versus business calls or keep a diary recording number of personal versus business calls.

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