ATO updates tax guidance for home-based businesses-By Maja Garaca Djurdjevic

The Australian Taxation Office

The Australian Taxation Office has advised that it will be accepting a temporary short-cut method from 1 March 2020 until at least 30 June 2020, allowing business owners of home-based businesses to claim a rate of 80 cents per hour for all their running expenses.

The ATO’s definition of a home-based business is one where the business owners’ home is also their principal place of business. That is, they run their business at or from home, and have a room or space set aside exclusively for business activities.

Business owners operating under these conditions may be able to claim tax deductions for home-based business expenses in the following categories:

occupancy expenses (such as mortgage interest or rent, council rates, land taxes, house insurance premiums);
running expenses (such as electricity, phone, decline in value of plant and equipment, furniture and furnishing repairs, cleaning); and
the expenses of motor vehicle trips between your home and other locations, if the travel is for business purposes.

The ATO has also advised that if the home is not a business owners’ principal (or main) place of business but they do some work from home, they may still be able to claim a deduction for some of their expenses relating to the area they use.

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