Working from home comes with major perks, such as saving precious sleep time on travel, and not having to layout your work outfit the day before, so you aren’t scrambling in the morning to find something appropriate!
In respect of expenses when you work from home – we have gathered some handy tips to help you understand what you can claim to ensure you claim everything correctly.
We first need to categorise how you work from home:
There are two main categories of working from home which can help you determine what you are allowed to claim:
- You are self-employed and run your business from home.
- Or you are an employee who sometimes works from home and it is not your main place of work.
- Self Employed Home Office
When you are self-employed and have a home office, that generally means you run your business from home.
If you operate some or all of your business from your home, you may be able to claim tax deductions for home-based business expenses in the following categories:
- Occupancy expenses such as mortgage interest or rent, council rates, land taxes, house insurance premiums.
- Running expenses such as electricity, gas heating, air conditioners, and phone calls and cleaning.
- You can claim costs of home office furniture and fittings and depreciate over the years.
- As the years go on, you can claim for the deduction of the life of what may be in your home office as they depreciate.
- This might be inclusive of computers, mobile phones, laptops, printers, furniture, and furnishing repairs.
- The expenses of motor vehicle trip between your home and other locations, if the travel is for business purpose.
- Employee Part-Time Work at Home
If you are not self-employed and instead an employee who sometimes works from home, but it is not your main place of work.
What you can claim does differ and you cannot claim for occupancy expenses but are still eligible to claim for running expenses, business phone calls, and the decline in value of office equipment.
That is because the occupancy expenses are not specific to your work at home, as you have another main place of business.
Please also when an employee you cannot claim things such as confectionary such as tea and coffee, and other general items in your household as generally your employer provides at work. Items provided by the employer and items that have been purchased by you, but reimbursed by the employer
How Can I Keep Track of All These Expenses?
Record Keeping Tips include
Make sure you understand the record-keeping requirements for your business and work-at-home scenario. As a priority keep accurate and complete records so you can avoid the various penalties that may apply.
The following tips can help you get it right.
- Keep accurate records of all cash and electronic transactions
- Consciously record all your diary entries of small purchases (which are no more than $10), and which total to no more than $200.
- Although they may seem like nothing at the time, these expenses do add up and can save you some extra cash on the side for that quick morning coffee run.
- Regularly reconcile your sales (both cash and EFTPOS) and enter into your tracking files and business accounting software system. Depending on your business, this may be daily, weekly or monthly.
- Where business expenses have both business and private use portions, work out and record the business portion accurately.
- Ensure you have sufficient records and receipts to substantiate business expenses claimed as tax deductions.
- Keep all expenditure claims receipts and invoices organised, saving them in apps for business/document management software, such as Hubdoc, Dext and ServiceM8 or simple save in a folder in your computer.
- This will ensure that all your copies are in one spot, to avoid frantically looking around for them later.
- You can also use the ATO recording app tor small business which is a free app for records https://www.ato.gov.au/general/online-services/ato-app/
- Keep track of all the running expenses related to working in a home office, which can also be done on an online software so that everything is in one place.
- Detail the time spent in the home office in comparison with other users.
- Keep track of it for 4 weeks, which can then be calculated to how much is spent per annum.
- The ATO also provides a Record-keeping evaluation toolto find out how well you are currently keeping your business records.
In summary, it may seem like a large amount of time and effort to keep track of these, but it will all be worth it in the long run!
Also remember Bookkeepers can help you manage stress, so as an employer, you can focus on your business.
Here at Focus Bookkeeping, we ensure that we have a comprehensive understanding of your situation to offer the best personalised assistance that we can!
Don’t hesitate to give us a call today and let us know what has been stressing you out so that you can get back to doing what you love, and not have to worry about what you can and cannot claim.
A Quick Reminder…
Focus Bookkeeping can help your business with ongoing services like bookkeeping, superannuation, and Business Activity Statements including BAS preparation, BAS review, and BAS lodgement.
Read more about Fabiana and Focus Bookkeeping.
Contact Fabiana for an obligation-free chat.