March 14, 2019 Emily Kermac

ATO Increases Home Office Expenses Rate

Emily Kermac

Emily Kermac

Partner
Emily Kermac is adept at small business structures, restructures and champions the growth of our clients. Her efforts are focussed on the optimal tax outcomes via trusts and SMSF’s.

Small businesses and taxpayers who run their office from their home will now be able to claim a larger rate for their running expenses.

The rate has been increased from 45c per hour to 52c per hour, and the change is effective as of 1 July 2018.

The rate includes the following home office running costs:

  • cleaning costs
  • heating and cooling
  • lighting
  • decline in value of furniture and furnishings.

In order to make a claim for home office running expenses, the worker must keep a record to show how many hours they work from home.

Alternatively, instead of using the fixed hourly rate option, taxpayers can calculate their actual expenses individually. In this case, a record must be kept of all bills/charges. The taxpayer must also proportion what percentage of the charges are related with the home office, which is done by calculating the floor area used for work as a percentage of the total home floor area.

Other expenses that are not included in running costs are:

  • internet and phone costs
  • decline in value of a computer
  • decline in value of office equipment.

These expenses can be claimed in some circumstances, but this is dependent on the reason you work at home. The below table explains further.

Expenses Home is principal workplace with dedicated work area Home not principal workplace but has dedicated work area You work at home but no dedicated work area
Running expenses Yes Yes No
Work-related phone & internet expenses Yes Yes Yes
Decline in value of a computer (work related portion) Yes Yes Yes
Decline in value of office equipment Yes Yes Yes
Occupancy expenses Yes No No

Table: ATO

 

If you are confused or concerned, you may contact a tax champion at (03) 8393 1000 who will be more than happy to discuss what you are eligible to claim.

Emily Kermac

Emily Kermac

Partner
Emily Kermac is adept at small business structures, restructures and champions the growth of our clients. Her efforts are focussed on the optimal tax outcomes via trusts and SMSF’s.

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