No matter how small your employment organisation is, the Australian government provides opportunity for individuals to claim tax deductions as well. If you work from your Melbourne home, you may be entitled to claim tax return deductions for your home office expenses. However, as it requires you to claim as an individual employee, you can’t claim deductions on occupancy expenses, including rent, mortgage interest, council rates and house insurance premiums.
There are also two types of deductions you can claim – depending on the cost of the asset you are claiming for. You can claim an immediate deduction for costs of items that don’t form part of a set, costing $300 or less. You can also claim an immediate deduction for costs if the items form part of a set, but altogether still costs $300 of less. But for those items exceeding this $300 threshold, you can only claim a tax deduction for their decline of value.
Tools, equipment and assets that may be eligible for the home office expenses tax deduction include calculators, computers and software, furniture, storage containers, hand tools or power tools, protective items, professional libraries, safety equipment and technical instruments.
Tools, equipment or other assets are eligible for this tax return deduction if it is used to help you earn an income. However if it is used for both work and private purposes, you will have to apportion the amount you claim. For instance, if you use a computer half the time for work and the other half for personal use, you can only claim a deduction on 50% of the incurred costs for your computer. You may also need to keep a running record, such as a diary, for the use of your work-related tools, equipment or other assets. That way, if requested by the ATO, you can show how you apportioned your private and work-related use.
Claims for tax deductions in Melbourne are not always straightforward there are a few exceptions and other rules that you may not know about. Particularly in the case of the range of tools, equipment and other assets you may use for your employment. So if you are wondering whether you are paying a fair tax rate, it will be worth consulting accounting firm with up to date information.