ATO earmarks Home Office Expenses as a key focus area

With the rising trend of employees working from home, this tax season the ATO has earmarked home office expenses as a key focus area.

There is evidence that many taxpayers are unaware of what they can or cannot claim - you cannot claim for expenses that you didn't pay for, expenses which you were reimbursed for, private expenses or expenses where you have no supporting records.

Extra costs relating to working from home are usually deductible but ATO are seeing some tax payers either over claiming or claiming private costs.

One of the biggest issues the ATO is seeing is tax payers are incorrectly claiming the entire amount of expenses such as their internet or mobile phone, not just the portion which is work related.

You can only claim a deduction for running expenses (heating, cooling, power) if you are able to demonstrate that there were extra costs incurred. For example if you have a study which you use for work related purposes you can claim a portion of running expenses (heating, cooling, power) for that space, if you sit in front of the TV or at the kitchen bench sending some emails, it is unlikely that you are incurring any additional expense.

Employees generally cannot claim occupancy related expenses such as rent, mortgage payments, land rates and house insurance.

The ATO may contact employers to confirm an employees working from home expense claim. Previously the ATO has found some claims made by tax payers were actually paid by the employer or that the employee wasn't required to work from home at all.

If you want to ensure that you are correctly claiming your home office expenses please contact us.

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