About Home Use for Business


Using Your Home for Your Business
Many people who run a small business use an area set aside in the family home for work purposes.

If you are doing this, you can make a claim for the area set aside so long as:

  • It is used principally for business use (such as an office or storage area), and
  • You keep a full record of all expenses you wish to claim.

The responsibility for keeping invoices and records for a home office is the same as for any other business expenses you are claiming. You can claim a portion of the household expenses, such as the rates, insurance, power, mortgage interest and depreciation (if you own the house).

A number of businesses use an area set aside in a family home for business purposes so if you use a part of your home, you may be able to claim GST on part of the costs of running the home.

Expenses you may be able to claim GST back on include telephone rental, power, insurance and rates. If you pay rent to a landlord then you may claim a proportion of the rental cost rather than mortgage interest and rates etc. You must keep invoices, receipts, statements or other evidence for these expenses.

You can only claim the expenses that relate to the area set aside for business and the purpose of the home use is to earn income or generate profits assessable for tax.

Who May Claim Home Use Costs
If you use part of your home, property, or flat etc in the production of assessable income, it is possible for you to claim part of the expenses relating thereto against this income. As already explained the room or area has to be set aside and used wholly and principally for the business at hand.

Professional men in private practice may claim a deduction for even partial use of certain rooms. This was established in a case where a lawyer succeeded in claiming part use of a dining room for a study and for conferring with clients. Medical practitioners also have their own special concessions as to the use of their homes.

Some classes of taxpayers who may be affected include:

  • Business people
  • Contractors
  • Farmers
  • Professional people
  • Commission agents
  • Tradesmen
  • People who operate from home.

A home may be used for workshop, studio, offices, study, garaging, storage, showroom, etc.