About Home Use for Business

What Claims Are Allowed?
Broadly speaking, the expenses fall into 2 categories:

  1. Running expenses (e.g. lighting, heating etc.) which relate to the income earning activities.

  2. Occupancy expenses (e.g. rent, interest on mortgage etc.) where the house or home is a place of business.

In general, the taxpayer is entitled to claim the difference between what was actually paid for running expenses and what would have been paid if no work was performed at home. The expenses represent the additional costs of exclusively maintaining or using part of the home for income producing activities.

Running expenses include the cost of heating, cooling, lighting and depreciation etc. Occupancy expenses are also allowed as the home is used as a place of business. The actual deduction is dependent on the taxpayer’s circumstances.

In most cases a claim can be made as an apportionment of the total expenses incurred on a floor area basis.

Claim by Proportion
You may claim a proportion of all relevant home expenses where it is your own home. This will also apply if it is a house that you rent. These include; rates, rent, power, insurance, repairs and maintenance, interest on your mortgage, depreciation and water.

If you live in a rented house or flat, the items involved would usually only be rent and power.  The proportion you can claim is that which the floor area of the part used bears to the total floor area of house.

How to Calculate the Home Expenses Claim
Work out the percentage of the work area, compared to the total floor area of the house. Then apply this percentage to the total house expenses.

For example:
In a house of 100 square metres Jack sets aside 10 square metres as an office (10% of the total floor area).

GST-inclusive house expenses for the full year were:

Insurance (house) $ 600.00
Power $ 860.00
Total costs (including GST) $2,660.00
Divide total costs by 9 to get the GST content $ 384.44
Total costs (excluding GST) $2,175.56

  • If Jack is not registered for GST the amount to claim is 10% of the total costs including GST: - $2,560 x 10% = $256

  • If Jack is registered for GST the amount to claim is 10% of the total costs excluding GST: - $2,275.56 x 10% = $227.56

  • Jack can also claim 10% of the GST content of these items in his GST return, he can claim this either annually or on a period-by-period basis.