It is estimated that close to one million businesses in Australia are home based and this sector is considered to be one of the fastest growing business sectors.
For those who choose to operate a home business there are many benefits including a better work-life balance where you can adjust your hours to suit the needs of family or your busy lifestyle and the ability to avoid any costs involved in renting a space for your business.
One of the biggest benefits that often goes unrealised by those who work at home, is the opportunity to claim deductions for any of the depreciable assets used for the purpose of operating the business.
Legislation stipulates that depreciation deductions can be claimed for the structure of a building and any of the plant and equipment assets in an income producing property. When you operate a business from home, so long as the area you use and the items within it are used strictly for the purpose of producing an income, the same rule applies.
For this reason, if you operate a small business from home it is important to seek advice from a specialist Quantity Surveyor to obtain a comprehensive tax depreciation schedule outlining the deductions available.
Often home business operators assume depreciation is something their Accountant will take care of. However, Quantity Surveyors are qualified under tax ruling 97/25 as one of a few select professionals with knowledge necessary to estimate construction costs for depreciation purposes.
To prepare a depreciation schedule, an expert will visit the property to take measurements to calculate the construction costs of business areas and photograph the assets contained within these areas. The Quantity Surveyor will then use various methods to calculate depreciation to accurately calculate and maximise the deductions the owner can claim with the help of their Accountant.
What items could be claimed in your home business?
The following graphic provides an example of some of the typical items which can be claimed as a depreciation deduction in a typical home office.
If you operate a business that requires the use of multiple areas of your home, a Quantity Surveyor can tailor your schedule to your situation. For example, if you own a bed and breakfast a site inspection will be conducted on the entire property and your Accountant will apportion the depreciation deductions accordingly.
To learn more about why it is important to maximise depreciation deductions for a home business, visit our commercial property depreciation schedules page.
If you have a home business and you would like to discover what deductions you can claim, you can make an enquiry online or speak with one of our expert staff on 1300 728 726.