Nowadays, increasingly persons are choosing self-employment and freelancing in Australia. As per a report, 1.38 million Australians were self-employed in 2021. This figure comprised 10.6% of the entire workforce within the country.
With advantages like flexibility and a greater work-life balance, working from house is slowly becoming a mode of alternative for professionals within the country.
Technology has given impetus to this trend as anybody can now get access to opportunities on the web. The perfect part is that professionals who make money working from home and are self-employed also can claim tax deductions.
Let’s get into this intimately and understand the necessities and the items on which individuals can claim deductions while working from home.
Working From Home Tax Deductions: 5 Areas
The Australian Taxation Office (ATO) offers tax claims on these five categories:
Everyone requires a basic office setup. The excellent news is that the ATO allows individuals working from home to say tax deductions for organising their home office.
You possibly can spend money on furniture, including chairs, desks, lamps, shelves, and filing cabinets, and get a tax deduction.
It’s a no brainer that any person working from home will need equipment to work and complete their assignments.
The ATO allows tax deductions on equipment like computers, smartphones, tablets, printers, scanners, fax machines, wireless routers, network drives, and other work-related equipment.
Other than recent equipment, you may also claim a deduction on the fee of repairs to your house office equipment, furniture, and furnishings. Cleansing costs are also included.
You possibly can fully claim for items that cost as much as $300 in your next tax return. Nonetheless, if you’ve gotten items costing greater than $300, it is advisable spread them out over several years.
The ATO considers the lifetime of an item to present you the total tax deduction. Different assets depreciate at different rates.
For example, the tax office considers the lifetime of a desktop to be 4 years. Thus, it’ll take as a few years to file your returns and claim your full tax deduction. You possibly can see the great list of depreciation for assets here.
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As you make money working from home, you may also claim a portion of your utility bills, including electricity and gas for heating, cooling, and lighting.
It’s necessary to notice that you would be able to’t claim your entire bill since the expense as an entire just isn’t for your small business. As you make money working from home, you’re also using these facilities to your personal use.
You possibly can either claim a hard and fast rate or work with an accountant to calculate your expenses. Nonetheless, that’s a tedious process, and also you’ll also should pay to avail of the accountant’s services. It’s advisable to go along with a technique that’s easy to work with.
If you make money working from home, you might be, most likely, using some type of telecommunication to interact with clients and customers.
The ATO lets you claim deductions on such expenses, like bills for your house phone, cell phone, and a dedicated voice or fax line for your house office. You may also claim the expenses for home or mobile broadband bills.
As within the previous case, you’ll not find a way to say your entire amount as a few of it are for private use. You possibly can claim a hard and fast rate or work out your expenses.
It’s higher to go along with the second option should you’re extensively using these for work. Your accountant can enable you work out an affordable figure. Ensure you’ve gotten bill records as proof.
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Although not much, supplies also account for some expenses once you’re running a home-based business.
You possibly can claim deductions in your expenses for stationery, printer paper, toner, pens, notepads, staples, paper clips, sticky tape, envelopes, and stamps.
Tax Deductions for Employees Working from Home
Employees who work for an employer but make money working from home also can claim deductions:
Eligibility to Apply for Deductions
- You could be working from home and fulfilling your employment duties. It’s not nearly checking emails or taking calls. You could be doing rather more and contributing in a meaningful manner.
- You ought to be incurring some additional expenses in consequence of working from home.
Expenses On Which You Can Claim Deductions
- Electricity expenses which might be used for heating, cooling or lighting
- Depreciation in the worth of office furniture, furnishings, and equipment like your desktop
- Web and phone expenses
READ: 6 Secrets to Being Productive in a Work-From-Home Setup
Plan Your Taxes Today!
Working from home comes with its own set of advantages. Greater than anything, it lets you explore your interests and do what you want.
The perfect part is you possibly can claim taxes on the expenses for organising your house office and expenditures on utilities.
Planning your taxes with an accountant will enable you benefit from these facilities provided by the ATO and make your small business profitable.