Home-based work expenses

Home-based work expenses

The Australian Tax Office allows Australians who work at or from their home to claim a deduction for the additional expenses they incur from running their business.

Generally speaking, the deductible expenses that can be claimed are divided into two categories; occupancy expenses and running expenses.

Occupancy expenses: relate to ‘the place of business’, i.e. where part of an individual’s home is used solely for income producing activities. Examples of occupancy expenses include:

  • mortgage interest
  • rental costs
  • insurance
  • security

To be eligible to claim a deduction for an occupancy expense, the area of the home used for business activities must have the ‘character of a place of business’. The ATO has stated that the following shows an area of a home is ‘a place of business’ where:

  • the area is clearly identifiable as a place of business
  • the area is not suitable for private or domestic use
  • the area is used exclusively for carrying on a business
  • the area is used regularly for visiting customers

Running expenses: are costs that relate to the use of facilities in the home to run the business, such as:

  • the cost of electricity and gas to heat, cool or light up a room
  • business phone costs
  • the decline in value of plant and equipment, such as chairs, bookcases and computers
  • the decline in value of furniture and furnishings, such as curtains and carpets
  • the cost of repairs to furniture and furnishings
  • cleaning costs

Individuals can only claim a tax deduction for the amount of running expenses’ usage from the business, not general household expenses.


If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.

Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.

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