| Working from home is an option that the Internet has | | | | house as a whole. |
| given many workers. Whether they are running their | | | | Running expenses are those that you incur as you use |
| own business from home or working off-site for an | | | | facilities in your home. These are electricity charges, |
| employer, the flexibility is attractive for many people. | | | | cleaning costs, depreciation or decline in value of office |
| When running your own company from home, you | | | | furniture and equipment, cost of repairs on furniture |
| may not be allowed to deduct expenses you incur at | | | | and equipment, telephone expenses, costs of office |
| home to reduce your company's taxable income. But | | | | equipment like computers and software, tools of your |
| your company may be entitled to claim | | | | trade, books, journals and trade magazines, and in |
| business-related expenses that may legally reduce | | | | appropriate cases, education seminars, conferences |
| your its taxable income. | | | | and workshops. |
| Not all work-related activities performed at home, | | | | In claiming home expenses as deductions for tax |
| however, make it a "place of business" for taxation | | | | purposes, the treatment may vary according to the |
| purposes. Unfortunately, there are no hard and fast | | | | nature of the expense and the extent of the |
| rules in the constitution of a home as a place of | | | | connection between the expense and the business |
| business. The determination of whether your home or | | | | activity. |
| a part of your home is a place of business depends | | | | If you only use a portion of your home for your |
| on the circumstances of your situation. | | | | company's activities, then you may not deduct the |
| A combination of factors such as the regularity of | | | | entire values of the occupancy expenses from your |
| income-producing activity conducted at home, the | | | | company's taxable income, but only a proportionate |
| identification of your home as a place of business, and | | | | amount thereof. Thus, the ATO has consistently ruled |
| the clear segregation of a portion of your home for | | | | that "where the premises, or part of the premises, are |
| conducting business may satisfy the "place of | | | | used partly for income-producing purposes and partly |
| business" test. | | | | for other purposes, the cost of repairs is deductible |
| In one case, the ATO did not consider a private | | | | only to the extent to which the premises are used for |
| "study" at home as a place of business. The private | | | | income-producing purposes." |
| study was deemed a mere convenience for the | | | | A similar principle of apportionment of allowable |
| business owner, and not necessarily a place where he | | | | expenses applies to other types of home office |
| primarily conducted his business. Thus, the deduction of | | | | expenses. For example, the depreciation allowance of |
| home expenses in such a situation was not allowed. | | | | an item that has mixed personal and business |
| Assuming that your home is considered your | | | | purposes is determined by obtaining a reasonable |
| company's place of business, you are entitled to | | | | estimate of the percentage of business use of the |
| deduct two types of expenses: occupancy expenses | | | | item. This proportion is then used to compute the |
| and running expenses. | | | | annual depreciation deduction for tax purposes. |
| Occupancy expenses are costs that pertain to the | | | | Understanding taxes and allowable deductions is no |
| ownership or the use of your home. These include: | | | | easy task. You may wish to use the Home Office |
| rent, mortgage interest, home insurance premium, | | | | Expenses Calculator available at the ATO website or |
| council and water rates and repairs that relate to the | | | | consult an accredited advisor to help you. |
