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Deductions for Home based Businesses - blog

Staking Your Claim

We’ve just been informed that the tax man will be taking a good look at people who make claims for tax concessions for home-based businesses.  I don’t get alarmed at these sort of reminders as I try my best to be as accurate as I can for all deductions.  So exactly what can you claim.

Firstly, home office deduction themselves.  If you have dedicated phone or internet connections for your business you can obviously claim a deduction for them providing you’re not already using them as a business deduction  each time a bill comes in.  Even if you don’t have dedicated lines (like us) you can claim a portion of the business usage from the total.  If about 50% of your phone and internet usage is for business you can make a claim for that portion of the bills.  Likewise, if you have a dedicated home office or work space like a garage or a workshop you can claim a portion of your electric or gas bills, and in some instances a portion of your council and/or water rates.  You cannot claim a portion of any mortgage or interest payment but you may be able to claim a portion of any rent you pay.  A portion of any building or contents insurance may be deductible.  We also claim for coffee and tea supplies we buy for use during work hours through petty cash as well as small cash purchases of stationery and postage.  Wherever possible we try to minimise using petty cash and make purchases directly through the main bank account or credit card because this makes for easier record keeping.  Purchase of office furniture and equipment are deductible but you may need to claim them over a longer period if they exceed a certain amount (about $1,000 in Australia).  Printing of business cards and stationery can be used, along with any purchase of office supplies, like printer inks, paper, envelopes etc.

If your standard workplace is at home and you need to travel to visit clients, suppliers or vendors you may be able to claim travel or fuel costs.  If you use your vehicle for work you may be able to make a claim for a portion of any ongoing maintenance costs.  Parking fees and road tolls are claimable. 

Likewise, if you are out on the road at mealtimes and purchase refreshments you may be able to claim back those costs.  Costs of networking functions can be used as deductions as well as providing any promotional materials.  Subscriptions to professional organisations or industry journals and magazines can usually be claimed.  Any costs associated with training or advancing your skills can be claimed and obviously if you have any staff all staff costs can be claimed.  Wages and pension payments for yourself are a legitimate claim.  All insurance costs for your business are deductible.

Finding exactly what you can and can’t claim is up to you to find out.  Its worthwhile keeping up to date with what is included in your possible deductions.  For example, there was an amnesty a few years ago for small businesses to make a single deduction on larger purchases during a single financial year.  We used the opportunity to get new air-conditioning for the office but I know other small businesses owners who used the opportunity to buy company vehicles and make an immediate deduction for the full purchase price.  Whatever, you are making claims for just remember to keep good records and providing you are not making bogus claims you have no reason to panic when the taxman wants to check your deductions.

Till next time,

Sarah-Jane X

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