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 for 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.