Save on Expenditures by Claiming Your Home Office Expenses
Working from home has its own share of advantages and shortages. While you get to stay in the comfort of your home and free yourself of the need to commute daily, you also need to invest in your home office equipment and utilise all your resources. That, however, is not something to be worried about.
If you are an Australian working from home or managing a small business, you do not have to carry all the expenses. You can claim tax deductions for these expenses. That is if your claims are valid and if you know how to do them.
Before you miss that opportunity, this article will inform you about what you should know concerning this topic.
You can apply for a claim as long as you meet the following criteria:
You operate directly at home
You work for clients outside of your home
You operate your business outside of the office but store the equipment and tools within your property
Claim your Home Office Expenses
The Government of Australia is willing to shoulder a percentage of the total cost you spend on making your home office more efficient, and take them out of your total tax amount. If you want to maximise this opportunity, the key is knowing all elements that can save you from many expenses. Here are some essential factors to consider.
Land taxes, home insurance premiums and monthly rental fee
Purchase of home office equipment (such as laptops, computers, printers, etc.)
Home office furniture depreciation
Ideally, all the mentioned items here are exclusively for home office use and have their measurement means. A separate office in your home with its bills would be a good example. Otherwise, you need to determine how much of the shared expenses (for example, the internet for the whole household) is exclusively used for your office.
Factors to Determine How Much You Can Claim
There are two main important determinants of your claim: what you decide to claim and the kind of setup you have at home.
Having a separate workspace would be an advantage because you can easily claim your expenses with enough proof. For example, the printer found inside your home office or the telephone line installed in the said room is proof that you utilise them for business purposes. Meanwhile, if you have no definite work area within your home, it is best to claim a percentage of the total household expenditure.
Take note that you cannot make claims on household items that are not exclusively for business use. Examples are the desk and chairs that you share with other family members.
In terms of the maximum amount you can claim for the deduction, there is no limit. You are free to declare how much you spent as long as you abide by the computation guidelines set by the ATO.
How to Calculate the Deductions
There are two main ways of calculating your claim deductions: the fixed-rate method and the actual cost method. Here is a quick definition of the two.
If you have a dedicated workspace in your home, you can use the fixed-rate method. That is because you have the records that separate your work-related expenses and work hours. There is a fixed identified value for every element in the office for this method. For example, your electricity and gas use has a fixed rate of 52 cents per hour. You may refer to the ATO calculator to get a more accurate computation.
If you need to compute your share of expenses in the household, the actual cost method is for you. It is a more complicated method, as you need to have your utility bill ready as a reference. You also need to get the cost per unit for each power expense, your total annual hours and the average number of units your appliance utilises.
All of these documents should have proper documentation and proof of calculation to look reliable.
Correctly filing the claim is challenging enough. Ensuring that you have the proper computation is another feat to overcome. If you have the time and energy to do this requirement every season, then you are in luck. But if you think you need a professional company accountant to help, let the experts do it for you.
New Wave Accounting is your reliable small business accountant on the Gold Coast. We are a team of accountants dedicated to not only deal with the accounting and bookkeeping aspects of your business. We can also help you lower your expenses by filing the right claims on your behalf. Contact us today to learn more about our services!