ATO zones in on home office expenses

The announcement comes after the ATO recently highlighted several small business professions that have a number of tax ‘grey areas’, including teachers, nurses, police officers, office workers and IT professionals.

While taxpayers can legitimately claim additional costs incurred as a direct result of working from home, they need to be careful not to claim private expenses as well, the ATO said.

ATO assistant commissioner Kath Anderson noted that while extra costs related to working from home are usually deductible, it is noticing some taxpayers either over-claiming or claiming private costs.

“Claims for the work-related portion of expenses like phone, internet, depreciation of your computer, printing and stationary are all allowed,” Ms Anderson said.

“But one of the biggest issues we are seeing is people claiming the entire amount of expenses like their internet or mobile phone, not just the extra bit related to work. In reality, the rest of us are subsidising their private phone calls and internet usage, which is not OK.”

Ms Anderson said the additional costs of running expenses like electricity for heating, cooling and lighting are deductible, however taxpayers need to be able to demonstrate that there were additional costs.

“If working from home means sitting in front of the TV or at the kitchen bench doing some emails, it’s unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space,” Ms Anderson said.

Further, the ATO said that while employees can claim additional running costs associated with working from home, occupancy costs are limited.

“Employees cannot generally claim occupancy-related expenses like rent, mortgage repayments, property insurance, land taxes and rates,” Ms Anderson said.