Work from Home v Home Office Deductions

Best to claim WFH or Home Office Expenses

Understanding the difference between Work from Home (WFH) and Home Office expenses can help you maximise your tax deductions and ensure you're claiming the right expenses on your tax return. Let's take a closer look...

Work from Home (WFH) Expenses

Work from Home expenses are additional running costs you incur as a direct result of working from home. These are generally related to the use of facilities within your home and can include:

• Energy Expenses: Costs for heating, cooling, and lighting.
• Internet and Phone Expenses: Costs for home and mobile internet or data, as well as mobile and home phone expenses.
• Office Supplies: Stationery, printer ink, and other consumables.
• Depreciation of Equipment: The decline in value of office furniture and equipment such as desks, chairs, computers, and laptops.
• Repairs and Maintenance: Costs for repairs and maintenance of depreciating assets used for work.

Methods for Claiming WFH Expenses

1. Fixed-Rate Method: From 1 July 2022, you can claim 67 cents per hour for additional running expenses. This method covers energy expenses, phone, and internet costs, and the decline in value of furniture and furnishings.
2. Actual Cost Method: You can claim the actual costs incurred, but you need to keep detailed records and receipts to substantiate your claims.

Home Office Expenses

Home Office expenses are related to the portion of your home that you use exclusively for work purposes. These expenses can include:

• Occupancy Expenses: Mortgage interest, rent, council rates, and building insurance. These can be claimed if your home has the character of a 'place of business.'
• Cleaning Expenses: Costs for cleaning your dedicated home office space.

Eligibility for Home Office Expenses

To claim home office expenses, the area of your home must be set aside exclusively for work and must be your principal place of business or your sole base of operations. This is more stringent than WFH expenses, which do not require a dedicated space.

Example to Illustrate

Let’s say you’re a freelance writer working from a dedicated home office. You can claim WFH expenses like your internet and electricity costs using the fixed-rate method or the actual cost method. Additionally, because your home office is exclusively used for work and is your principal place of business, you can also claim a portion of your rent and cleaning costs as home office expenses.

Common Traps to Avoid

• Mixing Personal and Work Expenses: Ensure you only claim the work-related portion of your tax expenses.
• Lack of Records: Keep detailed records and receipts, especially if you’re using the actual cost method.
• Incorrect Apportionment: Use a fair and reasonable method to apportion your expenses between private and work use.

Gotax Tax Advice

Always keep detailed records of your expenses and stay informed about the latest tax laws. This proactive approach will help you ensure you’re claiming the correct tax deductions and maximising your tax refund.

Gotax Deduction Grabber App

The Gotax Deduction Grabber App is an essential tool for tracking your WFH and home office expenses. It includes all the log books and tax expense recording systems you need. Simply scan the QR code to download and start using it today.

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