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This tax tip is based on our recent article in Startup Daily.

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If you are operating your business from your home, there is a chance that you may be able to claim a tax deduction on some or even all of your home office expenses in your tax return. These expenses include rent, equipment, furniture and more.

There are a few questions that you need to answer first in order to determine whether you can claim rent and other home office expenses.

First, is your business, as described by the Tax Office, a home-based business?

The terms for being home-based business are as follows;

  • Your business is operated at home – that is you carry out most of the business from home and clients visit your home. This may be someone who operates cooking classes from their home
  • You run your business from home – this is where you don’t own or rent any other premises for your business and you do most of the work from home. For example a business coach that hold session via skype.

If you answered yes to any of these terms then keep reading. You may be able to claim home office expenses.

Does your home office (or area set aside for your business) have what the Tax Office terms the ‘character’ of a place of business?

At times this gets quite confusing. The Tax Office has listed some guidance on when your home office (or area set aside for your business) is likely to have the ‘character’ of a place of business:

  • Your home office (or area set aside for your business) is:
  • clearly identifiable as a place of business
  • not suitable for non-business purposes
  • used only for carrying on your business
  • clients regularly visit your home office

If you answered yes to these, then you may be able to claim a portion of your home rent as a tax deduction. You may also be eligible to claim other expenses on top of your rent. These may include electricity, equipment and furniture.

If you answered no, then you may still be able claim other expenses which you incurred in running your business from home. These may include electricity, office furniture, phone charges and more.

It is essential that you always keep track of your numbers when you are dealing with home office expenses. Even if you cannot claim your rent there are numerous other home office expenses you can claim.

For more information on home office expenses for your startup, check out our article featured on Startup Daily here.