Occupancy expenses while working from home

The ATO has reminded that it is closely scrutinising work from home expense claims, particularly where taxpayers incorrectly claim occupancy expenses such as rent or mortgage interest.

The ATO notes that employees are generally not entitled to claim occupancy expenses where they choose to work from home, even if they live a considerable distance from their employer's workplace. To claim occupancy expenses, a taxpayer must be able to demonstrate that they incurred the expenses and that:

• The area of the home used for work is a genuine place of business; 5 • It was necessary to work from home because the employer did not provide an alternative place of business; and

• The nature of the taxpayer's income-earning activities requires them to maintain a place of business. When determining whether part of a home constitutes a place of business, the ATO considers whether the area:

• Is clearly identifiable as a place of business;

• Is not readily capable of private or domestic use; • Is used exclusively or almost exclusively for business purposes; and

• Is regularly used for client or customer visits. Where a taxpayer satisfies these requirements, deductible occupancy expenses (such as rent or mortgage interest) should be apportioned based on:

• The floor area used as a place of business;

• The period the area was used for work purposes; and

• The taxpayer's ownership or rental interest in the property where it is jointly owned or leased..