Home Office Deduction|Wilson & Assoc Chartered Accountants

Home Office Deduction – the Fixed Rate Method

If you work from home you can claim home office deductions under 3 alternative methods: 

  1. The Shortcut method
  2. The Fixed Rate method
  3. The Actual Cost method

The Fixed Rate Method

The Fixed Rate method allows deduction at a fixed rate for running costs and separate claims for occupancy, phone and internet expenses.

Additionally, you can claim a deduction at a fixed rate for each hour you work from home for the combined cost of heating, cooling, lighting, cleaning and the decline in value of furniture, instead of separately recording those actual expenses.

For 2019-20 year, the rate is 52 cents.  This rate is based on average energy costs and the value of common furniture items used in home business areas.

To claim using this method, keep records of either:

     •  your actual hours spent working at home for the year

     •  a diary for a representative four-week period to show your usual pattern of working at home.

You can then apply the four-week representative period across the remainder of the year to determine your full deduction amount. However, if your work pattern changes you will need to create a new record.

It is important to note you need to separately work out all other home work area expenses, such as:

     •  phone and internet expenses

     •  computer consumables and stationery

     •  decline in value on computers or other equipment.

Source: ATO

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Wilson & Assoc Chartered Accountants provides taxation and business advisory services to individuals, investors and businesses wherever you are based. We provide specialist services to startups and health care providers.

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Disclcaimer: The information provided within this article is general information only.  None of the comments in these notes are intended to be advice, whether legal, financial product or professional. You should obtain specific advice regarding your particular circumstances from a tax or legal professional.

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