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A taxpayer carrying on a business for the purpose of deriving assessable income is entitled to a deduction for any revenue expenditure or loss necessarily incurred in carrying on the business. The following is a summary of many of the expenses that can be claimed if you are running a business which is recognised as a business for tax purposes from home:

Home Office Expenses

A taxpayer who uses his or her home partly in furtherance of the conduct of a business is entitled to a deduction in relation to that part of the outgoings which relate to the use of the home for the work-related activities, including:

• power and gas
• rates
• insurance
• interest on mortgage
• house and contents insurance
• depreciation on portion of the house and assets supplied to the business
• repairs and maintenance
• rent if the home is rented.

Taxpayers should be careful about apportioning an appropriate percentage allocation to all expense claims though, as a number of costs incurred around the home will have a personal content as well. For example:

• with power it is normally to estimate a reasonable amount which is used for business - in most cases there is one power account for the whole of the house.
• house insurance and depreciation claims will be made in proportion of the building area used for income earning activities divided by the total area of the buildings at the home.
• Rates should be claimed on the basis of the proportion of the land area used for income earning activities divided by the total land area.

Claims could be made in respect of a room that is not exclusively used for business activity. In this instance an apportionment could be based on a criteria such as the amount of time spent on the income-earning activity.

Telephone

The following expense claims are allowable:

• if a taxpayer has only one line rental charge and is using the phone in furtherance of business activity half the rental cost, regardless of whether the rental charged is at the domestic or commercial rate. A claim of more than 50% is allowable if the actual use of the telephone supports a higher percentage claim.
• if a taxpayer has more that one line rental charge and is using those other lines for business activity the full rental line charges for those business lines, but not the line rental charge for that line which is effectively a residential line.
• any business toll charges on your home telephone lines.
• the Yellow Pages Advertising account for your business which may be charged to your Telecom Account.

It is advisable to analyse business/personal toll calls immediately on receipt of the toll accounts, as you may forget what calls were for if you don’t do this until the year when your Accountant asks for this.

Motor Vehicle Expenses