Tax Deductions for The Businessman At Home


Majorly overlooked and advantage scarcely taken, a form of tax deduction unknown to many is the form of home-based business tax deductions. Though it may sound unlikely, but the costs for cleaning up your house or the wear and tear inflicted upon it is also something that can be claimed! It isn’t even a necessity that a separate room be allocated for the purpose of business activities!

The layman definition of a ‘home-business’ being a business operated from home, that well includes jobs such as plumbing or say, painting. The individual need not work at his house, but if he/she doesn’t have any other property that is associated solely with his/her business, then the business may be deemed being operated from home.

Every tax deduction that can be claimed by a Small to Middle Enterprise (SME) in Australia can be claimed by a business operated from home, in the most general terms. Expenses that are related to occupancy and the operating of the business are the prime sectors wherein returns can be claimed.

Though not being a compulsion, it is recommended that a certain area in the house be dedicated solely for the operation of the business. The operations may include the regular operations in a business space or even workshop activities. This is required for a home and the business in question to pass the Australian Taxation Office’s interest deductibility test.

Several factors are considered before granting the home a thumbs up. To begin with, a signboard indicating the business and its proceedings on the porch should be there. The Office will also inspect whether the area in question is habitable and suitable for domestic requirements. Frequency of clients visiting also forms an integral part of assessment for the test.

The advantage of passing this test is that a portion of the house within which the business is being conducted can be claimed as tax rebate in proportion to the home mortgage or rent. The partition can be in terms of percentage. For instance, if 30% of a house is used exclusively for business related activities, then 30% of the interest applied on mortgage or rent can be claimed, along with council and insurance rates.

Aside from the costs linked directly to property, the wonders of tax reduction do not stop there. Every expense that goes overboard the expense that would normally be incurred upon simply residing in the premise is claimable. The basic running costs that include that of electricity, gas for heating thermostats and food alike are all inclusive. Even the costs of stationary and furniture can be a part of the claim. The decline in value of chairs, cabinets and book cases can be claimed just as in any other SME. Electronic equipment such as Laptops, computers and even internet for that matter is subject to rebate.

All these elements are eligible for tax returns directly proportional to the amount of space allocated to business activities. For example, if 20% of area is dedicated to the business, 20% of the power costs can be claimed. Wear and tear is very much included; including the decline in value of computers and other office equipment. Motor Vehicles and furnishings also decline in value, and must be highlighted.

Though all the above mentioned advice catered specifically to home businesses that have a space allotted for their business activities, there are several practices that allow businesses that do not have a dedicated area for their business activities. Either ways, it is recommended that a four week period diary is maintained wherein every expense catering to the business is mentioned for a detailed, accountable and reasonable presentation to the ATO.

It is always recommended that professional advice be taken from reliable firms such as Fusion Partners which are known to offer the best business taxation services. How their business accounting services Adelaide work can be seen at

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