The Government have implemented few measures for small businesses to assist them with COVID implications. All updates will be posted as it becomes available. For the ease, we are only updating one website which is listed below. Please click on the following link and it will take you to the information page.
The business world has come a long way and there are many options now available in regard to workplaces and how the work is completed. Many businesses are now becoming a lot more flexible with their working options and are starting to offer the option to work from home.
This can be an ideal situation for many people who are unable to get into the office each day due to having children, travel concerns or disabilities. Working from home can be very beneficial for the workplace and can improve productivity.
If you are someone who works from home on a regular basis it is important to know what you can claim in expenses. Expenses are the costs that are made for different items. If you are working from home, there are a number of expenses that you can claim.
If you work from home on a regular basis you may be able to claim a percentage of running costs that are incurred within the home. These running expenses can include; electricity, internet, furniture costs and the decline in their value, the cost to repair these items if needed and consumables such as printer ink, paper and stationery.
These can only be claimed in a percentage since you are not using the total cost of these towards your work time. You need to calculate the amount of time that these running expenses are used for a work basis.
Phone and Internet
If you are using your personal mobile phone or home phone for work purposes, you are able to claim a percentage of the cost of these as a business expense. The same goes for if you are using your internet for work purposes as well.
Once again you do need to calculate the amount of time that these items are used for work purposes and work out the percentage that you are able to claim. If you are claiming more than $50 for the expense of these, do you need to keep paper records of the amount of time that they are being used for work purposes and keep copies of the total bill amounts.
How do I claim running expenses?
If you want to claim at a fixed rate you can use a standard rate calculation of 52c per hour to calculate the amount that you are able to claim. This covers the cost of all running expenses and the total is used to calculate the amount that you can claim back. You need to document at least 4 weeks of running expenses in order to create the overall amount of time that you can claim over the year.
If you want to calculate based on actual hours, you firstly need to have a dedicated work area such as an office in a separate room of the house. From there you then need to work out the floor measurement of the room to give the percentage of the house that is being used for work purposes.
The running expenses for the house can then be divided so that you can determine the amount that is relevant to that dedicated room of the house. This is the overall amount that you are able to claim on running expenses.
How do I claim phone and internet?
There are a few ways that you can calculate the amount you can claim. If you are claiming under $50 that you can do a fixed rate for the number of phones calls the phone is used for.
If you want to work, it out based on actual usage this can be done by breaking down your itemized bill and selecting the times and calls that are used for business. If you do not receive an itemized bill than you will need to record the time the phone and internet is used for over a 4-week period in order to determine the amount you can claim back as an expense.
Claiming expenses where you can will help with your financial position and help lower the burden of working from home. If you are unsure on the rates, please talk to your Accountant.
We usually see small businesses making the wrong choices when choosing the right business structure. Business structures are very important not only for taxation purposes but to protect oneself from the outside world.
Our Legal Partner firm has written an article on different types of business structures and they advantages and disadvantages.
With advanced technology, and increasing rent, most small businesses are run from home to save on cost and travel. Unfortunately, most of the small business owners are not aware that conducting a business from home could be potentially subject to CGT especially if you are a sole trader.
Usually, your family home is exempt from Capital Gains Tax (CGT) as it is your main residence, however, if you are a sole trader running the business from home, you could potentially expose your main residence subject to CGT. The question here is not whether you claimed any occupancy expenses whilst running the business from home, but the fact would be based on whether your were eligible to claim the cost of running your business from home.
The few exemptions are:
- Businesses run under a company or trust structure will not have the CGT implications.
- Businesses operated from a rented home will not have CGT implications.
So before you start running your business from home, talk to your Accountant or Tax Agent.