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Working From Home?

Posted on 29 January, 2014 at 23:43
If you are working from home and have a dedicated work space, such as an office, studio etc. then you are entitled to claim tax relief against a percentage of certain of your household costs. There are just two principle conditions:

  • The area must be used principally for business use
  • You must keep a full record of all the expenses you want to claim


So what percentage are you entitled to claim?

In order to work out the percentage you are entitled to claim you need to calculate the floor space (in square metres) of the dedicated work space you have as a percentage of the floor space for the house as a whole.

So for example, if your dedicated work space is 8.6 square metres and the whole of your house is 151.6 square metres, then your dedicated work space accounts for 6% of your total house.

(If you need help converting room measurements to square metres then here is a great tool -

The percentage of your work space against the whole house is then the percentage of the household costs that you are entitled to claim.  


So exactly which household costs can you claim a percentage of?

The sort of costs that the tax office states you can claim a percentage of, based on floor area, are as follows:

  • Mortgage Interest (if you own the property)
  • Rent (if you are renting the property)
  • Rates
  • Electricity
  • Insurance

So using the above example, you would be entitled to claim 6% of these costs.
 

Telephone Costs

Unlike the above mentioned costs telephone costs are not based on a percentage of floor area. If your home is the management centre for your business then you are entitled to claim 50% of the fixed line rental costs of your phone. You are then also entitled to claim all the toll calls that are business related.

Of course, if you have two phone lines, one for business and one for personal then you can claim 100% of the costs for the business line but none of the costs for the personal line.  


GST

For both of the above types of costs, if you are NOT registered for GST then you can claim your percentages based on the GROSS costs. However, if you are registered for GST then your percentage claim needs to be against the net costs. You can then claim back the relevant percentage of the GST cost through your GST Return.  

Employees Working From Home

While the tax office specifically mentions small business owners working from home in relation to claiming home based costs, if you are an employee working from home you may also be entitled to claim home based costs as long as you are not receiving any sort of reimbursement or allowance from your employer in relation to these costs.  

Categories: home business

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