It is becoming increasingly common these days for many business operators to conduct their businesses from their private homes. As a result, there are many types of expenses which are usually domestic in nature that can be claimed as your business’ deductions, but first you need to ascertain whether your home is “a place of business” or merely a “home office”.
Home as a place of business
If you carry out your business mostly from home, or if you do not own/rent/utilise any business premise and use part of your home to conduct business from, then your home is more likely going to be a place of business.
Home Office
If you occasionally work from home, or maintain an office/study in which you undertake income producing activities which is not convenient to carry out at another main business premise, then your home is more likely going to be a home office.
Below are just some of the common expenses you can deduct and the tax implications of each type of home business:
| Home as place of business | Home Office | |
| Interest on home loans, rent, house insurance, council and water rates apportioned to the business area. | Deductible | Non deductible |
| Heating, lighting, telecommunication costs apportioned to the business area/business usage. | Deductible | Deductible |
| Depreciation, insurance and cost to repair any relevant equipment and furniture in the business area. | Deductible | Generally deductible to the extent the item is used for income producing purpose |
| Cost of cleaning of the business area. | Deductible | Non deductible |
| Maintenance and cost of decorating the area of the business. | Deductible | Non deductible |
| Capital Gains Tax Implications: | When you sell your home, an area of the home for the length of time it was used as a ‘place of business’ will be subject to capital gains tax.TIP: No CGT if you operate your business from a rented home. | No implication. |
If you have specific expenses or business circumstance and would like to know more about what you can deduct, please contact our office for more information.
Alternatively, you may refer to the ATO’s publication: https://www.ato.gov.au/Print-publications/Home-based-business/?page=1&fb_locale=en_GB
Contributed by: Helene Kosasie
