If you’re a business owner and use part of your family home for work, you can make a claim for this as a business expense.
You can claim a portion of your household expenses, such as rates, insurance, power and mortgage interest. The portion you can claim relates to the area of your home that you use for business.
Apportioning your household expenses
If part of your home is completely set aside for business use you just need to consider the floor area. If it is not completely set aside, you also need to consider the amount of time that part of your home is used for income-earning activities.
If you are registered for GST the expenses you claim will include GST, when this applies. If you are not registered for GST the expenses will not include GST.
If you have a mortgage you can claim the same proportion of your mortgage interest (but not the principal) paid during the year. There is no GST involved in this.
Like you do for any other business expenses you are claiming, you need to keep invoices and other records for these expenses.
Using your home for your business
Al runs a dog obedience school from a home office. His office is 8% of the floor area of his house and it is only used for the business. He is registered for GST, which means he can claim 8% of his total rates, insurance, and power (including GST). He can claim 8% of the interest he pays on his mortgage, which does not have a GST component.
This situation changes over summer when Al has a lot of guests. As a result his home office is used as a guest bedroom half the time. Over summer he can claim 4% of the household expenses.