How to claim a tax deduction on home office expenses
Whether you're working from home temporarily or permanently, aspects of your home office setup may be tax deductible. Eligible deductions could include depreciations on office furniture, stationery expenses and other costs like internet.
Depending on your circumstances, you may also be able to claim a portion of your Home & Contents Insurance premiums.
Insuring your home office
If some of your Contents Insurance premium is going towards covering items that you use for your business or work, such as a computer or printer, that portion of the premium could be considered a work-related expense. As such, you may be able to claim it as a deduction and reduce your taxable income.
If you’ve added new and valuable items to your home office, confirm that the sum insured on your policy is enough to include them if you ever need to make an insurance claim.
Who can claim home office expenses?
Your eligibility to claim depends on many variables. Exploring the Australian Tax Office (ATO) Home Office expenses can help you determine what applies to you.
You may be eligible if:
- your primary work function is conducted at home
- you work remotely some of the time, or
- you worked from home for a portion of the tax year.
If you're a business owner, the ATO has different taxation and deduction rules. Learn more about business insurance and tax deductibility.
What work from home expenses may be deductible?
If you’re working from home, many common operating costs may be tax deductible. These can include:
- electricity expenses associated with working
- phone and internet expenses
- computer and stationery consumables, and
- home office equipment, including computers, printers, office furniture and furnishings.
For home office equipment and furniture, you may be able to claim either:
- the total cost of items up to $300, or
- the decline in value for items over $300.
You can only claim the portion of expenses paid that directly relates to earning your income. You'll need to calculate how many hours are spent working relative to the item’s cost.
For example, you can divide your electricity bill between household (private) usage and work. The ATO provides formulas to support this. If you’re using a tax agent or accountant, they'll be able to help with these calculations so you can claim correctly.
Alternatively, the ATO allows a (revised) fixed rate method as an option from 1 July 2022. The fixed rate method is a lot simpler and allows you to claim 67 cents per hour you work from home for included expenses like:
- data and internet
- mobile and home phone usage
- electricity and gas
- computer consumables (e.g. printer ink), and
You just need to record the number of hours you’ve spent working from home for the year. While the ATO allows you to estimate this by using a four-week timeframe to demonstrate your working patterns for the 8 months from 1 July 2022 to 28 February 2023, this approach can no longer be relied on for time you spent working from home from 1 March 2023.
If you choose to apply the fixed rate method, however, you can’t then claim a separate deduction for any expenses covered by that method (no double-counting!). Luckily, if you choose this method you can still claim a separate deduction for things described above not covered by those included expenses such as:
- the decline in value of home office equipment,
- repairs and maintenance of that equipment, and
- cleaning costs (in the case of a dedicated home office).
You can visit the ATO website to learn more about both methods for working from home expenses.
Keep your receipts for tax time
Keep a record of your expenses, as the ATO may ask you to prove your work-related claims. Receipts are also handy if you’re sorting out your Home & Contents Insurance for the first time, as they provide a good estimate of the value you need to cover.
You can store your receipts and records digitally. Consider keeping photos or scans on a cloud-based storage service.
Consider professional help
The information here is a general guide and has not considered your circumstances. Tax legislation is also subject to change from time to time. If you’re still unsure about what you can claim for at tax time, it might be worth getting in touch with a registered tax advisor or the Australian Taxation Office.
Get a copy of your tax invoice online
It’s quick and easy for eligible customers. You don’t even need to log in! Simply provide your name, date of birth, and phone number to receive your tax invoice in moments.
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Consult the Australian Taxation Office or your registered tax advisor to understand if the information is applicable to you or how they apply to your personal circumstances.
Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Read the Product Disclosure Statement before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.
The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.