ATO warning on home occupancy expense claims

The ATO has identified that some taxpayers are incorrectly claiming rent, mortgage interest and other occupancy expenses as part of their work-from-home expenses.

To claim occupancy expenses, a taxpayer must be able to demonstrate that:

• the area of their home they used for work purposes is a 'place of business';

• if they are an employee, it was necessary for them to work from home because their employer did not provide an alternative 'place of business' to work from; and

• the nature of their income-earning activities requires them to have a 'place of business'.

Factors that may indicate whether an area has the character of a 'place of business' include whether the area is:

• clearly identifiable as a 'place of business';

• not readily capable of private or domestic use;

• exclusively or almost exclusively used for carrying on a business; and

• used regularly for client or customer visits.

Taxpayers who are eligible to claim occupancy expenses can claim a portion of those expenses based on floor area, the period they worked from home, and their ownership of the property. 

If you have any questions in relation to the matters discussed in this blog, please get in touch with us.