- Evidence to support expenses
- Substantiation
Evidence to support expense
If you incurred home office, telephone, internet, computer and/or software expenses, and wish to claim these running costs as a deduction, the nexus has to be clearly established. If your tax return is selected for a review or an audit, you may be asked to provide the following records to the ATO:
- details of the income-producing activities undertaken by you at home that result in running expenses in addition to normal domestic or private running costs
- details of the home office, study and other facilities or assets that you provide and maintain specifically and/or exclusively for work-related activities
- a letter from your employer confirming you are carrying on income-producing activities at home as part of your duties
- where a home office is maintained because the employer does not provide an alternative place of business and it is necessary for the taxpayer to work from home, a letter from your employer stating the basis of your requirement to work from home as a ‘place of business’.
Substantiation
To substantiate the deduction you may be asked to keep the following records:
- a list of all items included in your claim for home office, phone, internet, computer, software and similar expenses, and receipts, accounts and/or other documentary evidence for each item
- where claims are based on a representative pattern, an estimate based on diary entries over a month period along with relevant accounts used to calculate the deduction.
A fixed rate of 45 cents per hour for home office expenses may be used once a representative pattern has been established for heating, cooling, lighting and the decline in value of furniture instead of keeping details of actual costs.
Where a home office is maintained because the employer does not provide an alternative place of business and it is necessary for the taxpayer to work from home, you may be asked to keep the following records:
- details of the area within the home reserved for the use of a ‘place of business’, and the basis of apportioning occupancy expenses such as rates, mortgage interest or rent between business and private use
- receipts, accounts and/or other documentary evidence for occupancy expenses included in work-related expense deductions.
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