Home in on extra tax deductions this year

EVEN if you only work from home sometimes you may be entitled to more cash than you think.

moneysaverHQ - Anna Missen working from home

GROWING numbers of Australians are bringing work home, opening up some handy tax savings along the way.

Home office tax deductions are often ignored by people who incorrectly believe they can’t make a claim unless they run their own business.

However, there’s a pile of things that are tax deductible for people who do some work at home, including mobile phones, computers, equipment, furniture and energy use.

This week is your last chance to stock up if you want to get a deduction for 2014-15.

“You don’t need to be self-employed to claim a tax deduction on a home office,” says Simone Davis, a senior tax agent at etax.com.au.

“If you are frequently required to handle emails from home or have a formal teleworking arrangement, you’re entitled to claim a tax deduction for a percentage of your running costs and equipment.

“This isn’t limited to the standard computer, internet and phone costs. It can also include things like lamps, chairs and desks.”

INSTANT CLAIMS

Items bought for income-producing purposes that cost less than $300 can be claimed instantly, says Davis. This might include portable hard drives or wireless routers, she says.

New research by Officeworks found that only one quarter of people claim their phone or internet for business use, and only one in five people claim for stationery.

CPA Australia head of policy Paul Drum says you should make sure you keep records to support your claims, including itemised phone accounts that identify work-related calls.

“If you are apportioning expenses between business and private use, make sure you calculate it correctly,” he says.

“A diary kept over a representative four-week period is recommended as it will help you calculate how much you used your equipment, home office and phone for business purposes.”

Officeworks says only 25 per cent of working Australians are proactive at the end of each financial year by purchasing tax-deductible items.

Employees and self-employed people can claim a tax deduction for home office running expenses such as heating, cooling and cleaning.

RUNNING COSTS

Deloitte Private tax partner Richard Bridgart says both employees and self-employed people claim a tax deduction for home office running expenses such as heating, cooling and cleaning.

However, occupancy costs such as rent, mortgage payments and council rates can’t be claimed by employees, and can only be claimed by self-employed people where the house qualifies as a place of business, he says.

“The recommended method to determine the deductible amount is to apportion the expenses incurred on a floor area basis,” he says.

Beware that if you claim occupancy costs, you may have to pay capital gains tax on a portion of the profit when you sell the home, Bridgart says.

If you don’t want the hassle of working out all your running costs, the Australian Taxation Office lets you claim a standard 45c per hour for time spent working at home.

OFFICE SUPPLIES

Paul Migliorini, CEO of workplace provider Regus, says don’t forget office supplies.

“The day-to-day items that allow you to work from home such as the printer, ink, toner and postage, are all fully tax deductible,’ he says.

Don’t claim a deduction for items that are paid for by your employer. Double dipping can get you in strife with the taxman, Migliorini says.

“Be sure to claim on items that are not provided by work but used for work purposes such as iPads and computer screens,” he says.

Anna Missen, 26, is creative director at women’s clothing chain Mishkah and plans to use a tax accountant this year to claim for items she uses while working from home.

“I do a bit every day, even if it’s a couple of hours in the morning or an hour after work,” she says.

She has an office chair, desk, shelving, computers and a phone that may deliver her a deduction. “I purchased an iPad for what I thought was personal use but it turned out that I use it a lot for work.”