Arrowhead Tax Accountants
Certified Practising Accountant

Home Based Businesses – Maximise Your Tax Deductions

May 17, 2024

When running a home-based business in Australia, you can maximise your tax deductions by understanding the specific expenses you can claim. Let’s explore how you can optimise your deductions:

What Is a Home-Based Business?

A home-based business is one where an area of your home is set aside exclusively as a place of business.

Expenses You Can Claim:

The types of expenses you can claim depend on how you operate your business from home and your business structure.

Occupancy Expenses:

These include:

  • Mortgage interest or rent
  • Council rates
  • Land taxes
  • House insurance premiums

Running Expenses:

These cover various costs related to operating your business:

  • Electricity
  • Phone
  • Decline in value of plant and equipment
  • Furniture and furnishing repairs
  • Cleaning

Motor Vehicle Trips:

You can claim the cost of motor vehicle trips between your home and other locations if the travel is for business purposes.

Remember to keep accurate records of your business-related travel.

Partial Exemption:

If you have an area set aside as a ‘place of business’, you can claim both occupancy expenses and running expenses.

Be aware that if you use part of your home for business purposes, you may have to pay capital gains tax (CGT) when you sell your home. Keep proper records to calculate your deductions or CGT.

Consider applying the small business CGT concessions to reduce your CGT liability.

Recent Changes:

The temporary shortcut method for calculating running expenses ended on 30 June 2022.

For the 2022–23 income year, you can use the revised fixed rate method, which is a fixed rate of 67 cents per work hour. It includes usage expenses like electricity, gas, stationery, computer consumables, internet, and phone.

Speaking with a trusted tax adviser is the best way to ensure you comply with those guidelines – why not start a chat with us today?

Disclaimer: The contents of this paper are for general information only. They are not intended as professional advice, for this you should contact a suitably qualified accountant or other professional. The tax law and ATO position on these matters may be subject to both prospective and retrospective changes.

© Arrowhead Accounting Pty Ltd trading as Arrowhead Tax Accountants 2024