What’s the difference between running and occupancy expenses for business owners claiming home-based business expenses, and when can both be claimed?

When operating your business from the comfort of your home, you may be eligible to claim the portion of expenses that directly relate to your business activities. Let’s distinguish between running expenses and occupancy expenses:

Running Expenses: These are the costs associated with utilizing various facilities within your home for business purposes. Examples include electricity, gas, stationery, computer consumables, phone and internet usage, and the depreciation of assets. By tracking these expenses, you can claim a deduction for the portion that is attributable to your business operations.

Occupancy Expenses: On the other hand, occupancy expenses pertain to the ownership or usage of your home itself. This includes mortgage interest or rent, council rates, land taxes, and home insurance premiums. You can claim both running expenses and occupancy expenses if you have a dedicated area within your home that is exclusively used as a “place of business.”

However, if you don’t have a designated area solely for business purposes, you may still be entitled to claim a portion of your running expenses. It’s important to note that claiming occupancy expenses might not be possible if the personal services income (PSI) rules apply to your business income. Please refer to the PSI question on the opposite page for further information. Additionally, it’s worth considering that if you utilize part of your home for business purposes, you may be subject to capital gains tax (CGT) when you sell your property.

For more comprehensive details and guidance on home-based business expenses, visit ato.gov.au and search for “home-based business expenses.” 

At Jayton Joseph, we have the expertise to navigate the complexities of tax deductions, ensuring you make the most of your eligible claims. Contact us today to discuss your specific circumstances and maximize your deductions for home-based business expenses.

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Jayton Joseph Accountant

Unit 18B 3 Cottonwood Place
Oxenford,Qld 4210

( Near Woolworth Access via laneway beside Sullivan Nicolaides)
Jayton Joseph Accountant