Optimising Home-Based Business Deductions: A Guide for Small Business Owners

With the growing trend of running businesses from home, it's essential to understand the different methods for claiming deductions. This knowledge will help you choose the best approach for your situation.

Common Deductible Expenses

If you operate your business from home, you may be able to claim various expenses, including:

●     Heating

●     Cooling

●     Lighting

●     Phone

●     Internet

Using the Fixed Rate Method

One of the simplest ways to claim these deductions is by using the fixed rate method, which is set at 67 cents per work hour for the 2024-25 income year.

Important Notes on the Fixed Rate Method

●     Expenses covered by the fixed rate cannot be claimed separately.

●     However, you can still claim additional expenses not covered by the fixed rate, such as:

○     Office cleaning

○     Depreciation of assets like laptops and office furniture

Claiming Occupancy and Running Expenses

If you have a dedicated area in your home used exclusively as a place of business, you may also be eligible to claim occupancy expenses, such as mortgage interest or rent, along with running expenses.

Claiming Business-Only Expenses

Remember, when calculating your deductions, you can only claim the portion of expenses that relate directly to your business.

Maintaining Proper Records

Keeping accurate records is crucial. Most records need to be kept for five years, so it's important to store them safely. Ensure that records are written in English or can be easily translated into English.

Capital Gains Tax (CGT) Considerations

If you're running a business from home, you should be aware that selling your home may trigger a CGT liability. However, you may be able to reduce this liability by applying for small business CGT concessions, if eligible.

Need Assistance?

If you have any questions or need further guidance recording keeping, claiming deductions for your home-based business and CGT using essentials to strengthen your small business, do not hesitate to contact us for professional advice.