Running your business from home can have great benefits, such as being able to spend more time with your family, not having to travel, and deciding your work hours. To make the most out of your home business experience, it is important to be aware of what tax deductions you can claim.
If your home is also your principal place of business and you have a designated room space for business activities, then you are considered to be running your business from home. However, if you only do some business activities from home, then you may be considered to be working from home and the following tax implications don’t apply to you.
You can claim deductions for your home business on expenses that you need to undertake work that produces income. Tax-deductible costs include:
- Utility expenses of the rooms you use for business. This can include electricity, water and gas bills that have been apportioned between business and private use.
- Work equipment such as computers and printers. For items costing up to $300, you can claim the full cost of the item. For equipment costing $300 or more, you can claim the decline in value.
- Cleaning and repairs for work equipment.
- Work-related phone calls. If you have a phone that you use for both business and private matters, you can claim a deduction just for the business calls.
- The depreciation of work equipment, where you must apportion the costs of business and private use.
- Occupancy expenses such as rent, insurance and mortgage interest, where you have apportioned the business and private spaces in the house. You can work out how much to claim by measuring the floor area of your business room as a proportion of the rest of your home.