How to correctly claim your home office expenses

Perhaps you’ve turned a spare bedroom into an office. Or, you could be storing stock in a shed you’ve got out the back. If you’re doing either of these, it’s likely that some of your household costs are overlapping with operational business costs.

The costs directly related to producing income for your business – which may include rent, mortgage interest, electricity, rates, insurance, and telecommunication bills – can all be recorded as business expenses. However, this all depends on you setting things up the right way.

How do we calculate your relevant home office expenses?

First, we need to understand the physical area of your home being dedicated to work.

Strangely enough, the government won’t accept you claiming any expenses if you’re repurposing your dining table as a desk for sending emails. But they will if you’ve set up a dedicated desk in your kitchen corner.

In any case, you need to calculate the total physical area in the house that’s dedicated to business. Here’s an example:

  • The total house area is 150m2
  • The garage is used exclusively for storing business assets – 36m2
  • A small room is used exclusively as a business office by the owners – 9m2
  • Total area for business use: 36m2 + 9m2 = 45m2.
  • Percentage of the home being used for business: 45m2/150m2= 30%

In this case, 30% of each expense can be claimed as relevant to the business. This percentage can be applied to:

  • Interest on a mortgage, or rent
  • Insurance (both home and contents)
  • Rates (water and land)
  • Electricity and gas
  • Security and alarms costs
  • Internet
  • Home phone line (50%)

Other, more specific expenses can also be claimed.

  • Repairs and maintenance work on the areas designated for business can become full business expenses
  • Your mobile phone bill, if it’s used mainly for business

There’s an easy way to claim what you’re owed

It’s as simple as keeping a record of your costs.

Save your invoices and bank statements to your Google Drive or keep a spreadsheet and your Beany accountant will review them when it’s time to prepare your financial statements. From there, we’ll work out what can and can’t be claimed!

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