Many people who run a small business use an area in the home for work purposes. You do not have to have an area specifically set aside for the business. If you’re doing this, you can make a claim for the area so long as you keep a full record of all expenses you wish to claim.
If there isn’t a separate area for the business the apportionment will need to take into account criteria such as the amount of time spent on income-earning activities and the area used at home.
No deduction is permitted for any private or domestic expenditure.
The responsibility for keeping invoices and records for a home office is the same as for any other business expenses you’re claiming.
You can claim a portion of the household expenses, such as the rates, insurance and power. You can also claim a portion of the mortgage interest if you own the house. You must keep invoices for these expenses.
In a house of 100 square metres Mereana uses 10 square metres as an office (10% if the total floor area). House expenses (GST inclusive) for the full year were:
Insurance (house) $700.00
Total cost (including GST) $4,480.00
Multiply total costs by 3 and divide by 23 to get the GST content $584.35
Total costs (excluding GST) $3,895.65
If Mereana is not registered for GST, the amount to claim is 10% of the total costs including GST:
$4,480 x 10% = $448
If Mereana is registered for GST, the amount to claim is 10% of the total costs excluding GST:
$3,895.65 x 10% = $389.56
Mereana can also claim 10% of the GST content on these items in the business’s GST returns. This is claimed throughout the year as the bills are due or paid
You may claim a proportion of the mortgage interest (not principal) paid during the year. From 1 April 2011 you’re no longer able to claim depreciation on the house itself. If you’ve claimed depreciation on the house in the past, depreciation recover will still apply.
You can claim the depreciation on capital items such as a computer, office furniture and fittings, or shelving, used for business purposes in your home.