Tax Accountants’ Guide to Home Office Deductions

Recently, more individuals are embracing the convenience of working from home. This shift offers unique opportunities for tax accountants. There will be more chances to help startups in optimising their tax returns.

This guide is here to assist tax accountants in understanding the details of home office deductions. It’s also helpful for accountants dealing with small businesses.

Understanding Home Office Costs

Home office expenses include the costs of doing business or working from your home. You can lower federal taxes by deducting these costs, but there are rules and limits. The Australian Taxation Office (ATO) splits these expenses into running and occupancy expenses.

Categories of Home Office Expenses

To determine if you can get home office deductions, you need to understand the costs of working from home. This will help you see what you can deduct and how to make the most of it.

Home Office Running Expenses

Running expenses are the costs of keeping your home office in good shape. They cover heating, cooling, electricity, internet and phones. Also included are the wear and tear of office furniture, equipment, curtains, and more. Cleaning and repairs are part of this.

Until the 2022-23 financial year, you could only claim these costs if you had a dedicated workspace. But starting in July 2022, the Australian Taxation Office changed the rules. You can claim some of these costs even if you need a dedicated home office space.

Home Office Occupancy Expenses

Occupancy expenses are for people who use parts of their homes for work. For example, self-employed pros with home salons or art teachers with a studio at home. If you’re an employee working from home, you must prove to the tax office that you have a specific space for work.

These costs include rent, mortgage interest, rates, and house insurance. To claim these costs, determine the work-related part of each cost based on how much of your home you use for work.

Defining the part of your home used for work is essential. You can show this with signs, using space not intended for home stuff and only using the area for work-related things, like client meetings.

Eligibility for Home Office Deductions

Individuals must meet two criteria to claim home office expenses in Australia. They should actively perform employment tasks from home, and these expenses should directly relate to their work. Maintaining organised records is essential to support your claim.

Simplified Explanation of How Accountants Calculate Home Office Expenditures

Tax accountants in Brisbane use two methods to calculate home office expenses. These are fixed rates and actual costs. Their role is critical in helping individuals and businesses optimise their tax situations.

Revised Fixed Rate Method

The fixed-rate method involves a set rate calculated per work hour to cover extra running expenses. This approach now requires various documents. Specifically, comprehensive records of working hours, timesheets, rosters, work logs, and a diary for home office expenses, replacing older methods. This change ensures accuracy and compliance with the ATO’s requirements.

Actual Cost Method

The actual cost method entails claiming the actual expenses incurred while working from home. Keep a diary of work hours and receipts for depreciation on assets. Calculate cleaning, power, heating, and cooling expenses by measuring floor area and appliance wattage. Use itemised bills for internet and phone expenses. Seek help from a tax accountant if needed.


The Role of Tax Accountants

Tax accountants play a pivotal role in many aspects. They assist in assessing eligibility, selecting the most beneficial calculation method, and providing guidance on record-keeping.

Eligibility Assessment

Tax accountants check their clients’ work situations to see if they can get home office deductions. This check makes sure they meet the Australian Taxation Office’s (ATO) rules. It involves confirming that the client works from home and that their expenses are linked to their job.

Method Selection

Accountants for small businesses help clients pick the best way to calculate home office expenses. They think about things like the type of work, the size of the workspace, and what records are available. They’ll decide whether the fixed rate method or the actual cost method is better through a careful analysis.

Record-Keeping Guidance

Tax accountants help clients keep good records. They might tell clients to keep track of hours worked, save receipts for expenses, create work logs, and collect other documents needed to prove their claims. They also make sure clients follow the ATO’s updated rules for keeping records, especially under the new fixed-rate method introduced in March 2023.

The Significance of Accountants for Small Businesses

Accountants for small businesses work to ensure that their clients maximise their deductions. They can identify expenses clients may still need to consider and offer strategies to optimise their deductions.

Accountants help small businesses save money on their taxes while ensuring they follow tax laws. This dual focus on savings and compliance is vital for the financial health and sustainability of startups.


This comprehensive guide simplifies the complexities of home office deductions. From understanding the categories of expenses to the eligibility requirements and the two primary methods of calculation: the revised fixed rate method and the actual cost method.

Given the evolving nature of remote work and changing regulations, consulting a qualified tax accountant is crucial for maximising your deductions and ensuring compliance with tax rules.

Tax accountants are your dependable allies. They provide vital aid and support during tax audits and help secure your financial future. Accountants do it through competent and accurate handling of your home office deductions. Contact a tax accountant today to protect your economic well-being.

Key Takeaways

This guide has covered various aspects of home office deductions, such as the types of expenses, who’s eligible, and how to calculate deductions using the fixed rate and actual cost methods. Paying close attention to detail and keeping accurate records is vital, especially with recent changes from the Australian Taxation Office.

Tax accountants play a crucial role in this process. They use their expertise to determine if clients qualify for deductions, recommend the best deduction method, and help clients keep the correct records. During tax audits, they provide essential support.

For small businesses, accountants are invaluable. They help save money on taxes while ensuring businesses follow the rules. Balancing financial savings and compliance is crucial for small businesses’ financial health and sustainability.