Working from home has become increasingly common, and with it comes the potential to claim certain expenses related to maintaining a home office. Both Australia and New Zealand provide tax concessions for home office expenses, but the specific provisions and eligibility criteria vary between the two. Here’s a breakdown:
In Australia, if you work from home, you may be able to claim a deduction for the additional running expenses you incur. These include:
1. Utility Expenses: Proportion of electricity and gas expenses for heating, cooling, and lighting.
2. Phone and Internet Expenses: Work-related proportions of your phone and internet bills.
3. Depreciation: Decline in value of home office equipment, including computers, phones, and printers.
4. Stationery: Items like printer ink, pens, and notebooks.
5. Home Office Cleaning: Costs of cleaning materials or services, for the area you use for work.
6. Repair Costs: For home office equipment and furniture.
7. Home Office Equipment: Up to a certain extent can be claimed for items with a short lifespan such as a lamp.
8. Occupancy Expenses: These are expenses that you pay to own, rent, or use your home. These can include rent, mortgage interest, insurance, and rates. However, these can only be claimed if the home is the principal place of business, meaning no other location is used to conduct business.
Calculation Methods: The Australian Taxation Office (ATO) provides multiple methods to calculate home office expenses, including a fixed rate per hour, actual costs, or a shortcut method (specifically introduced due to the COVID-19 pandemic).
In New Zealand, if part of your home is used primarily for business, you can claim a portion of your home expenses as a business expense. This includes:
1. Utility Expenses: Part of your power bills can be claimed, based on the portion of your home used for business.
2. Phone and Internet Expenses: Work-related proportions of your phone and internet expenses.
3. Depreciation: Decline in value of office equipment and furniture.
4. Repairs and Maintenance: For the area of the home used for business.
5. Rent or Mortgage Interest: A proportion of rent or mortgage interest can be claimed. This does not include the principal repayments on the mortgage.
6. Property Insurance: Proportion of the insurance that covers the business-use area.
7. Rates: Both local council and water rates, based on the portion of the home used for business.
Calculating the Deduction: Typically, the expense deduction is calculated based on the floor area of the workspace as a percentage of the total home area. However, if another method provides a more realistic representation of the workspace costs (like tracking actual costs), it may be used.
Comparison and Considerations
Types of Deductible Expenses: The nature of deductible expenses in both countries is quite similar, covering utilities, equipment depreciation, and certain property-related costs. However, the specifics of what can be claimed and the caps on certain claims might differ.
Calculation Methods: Both countries allow the apportionment of costs based on floor space or actual costs. Australia’s fixed rate per hour and shortcut methods provide added flexibility.
Record Keeping: Regardless of the country, it’s imperative to keep detailed records of all claims, including bills, receipts, and calculations.
In conclusion, while both Australia and New Zealand offer tax concessions for home office expenses, it’s crucial to be well-informed about the specifics in each country. Consulting with a tax professional or accountant can ensure that you claim all eligible deductions while remaining compliant.
(For the updated information, refer here and here. Disclaimer: Please note that the information provided herein is for general informational purposes only and does not constitute financial, investment, tax, legal, or other forms of advice. For relevant details, prefer to a registered tax professional.)