Maximise your tax claims working from home

• An office, appropriately equipped, must have been set up at the place of primary residence;
• The office must have been used regularly and exclusively for work purposes;
• The office must have been used for more than 50% of the employee’s duties or, if the employee earns more than 50% of their remuneration from commission or other variable payments based on work performance, more than 50% of the employee’s duties must have been performed away from the employer’s office;
• Any home office expenses must be linked to employment use and must be verifiable; and
• Home office expenses must be claimed against source code 4028 in the income tax return.

Once you formally designate a portion of your property as an office and start claiming “home office” expenses, it will adversely impact the tax exclusions when/if you sell the property. There is a high likelihood that a taxpayer who claims home office expenses for the first time will be selected for verification or audit – so be prepared. Have all the documentation in order. Typical expenses that may be deductible for a home office include:

• bond interest (ONLY up to 2022 tax year)
• rent of the premises;
• cost of repairs to the premises; and
• expenses in connection with the premises, which could include:
  • rates and taxes;
  • cleaning costs; and
  • electricity.

Other typical expenditures that may qualify for a separate deduction in respect of maintaining a home office, include:

• general wear and tear on items used for trade purposes in the office;
• office equipment, furniture, fittings, and repairs thereto;
• phones;
• Internet;
• stationery.