If you’re looking at claiming your home office furniture and expenses – it’s cool; we’ve got you. Not working from home? Read on as this guide covers business claims too.
If you’re fitting out a new office layout or refurnishing your existing commercial space, it can be challenging to understand just how that fits in with your annual tax returns. Between office furniture, storage facilities and the general costs of upkeep within a commercial space, which expenses are eligible for tax deductions will largely depend on whether or not those costs are directly related to the business and how the business operates. As a business owner in Australia, you’re required to keep a record of business expenses to be eligible to claim a deduction, in order to reduce the income tax you pay.
As an employee working from home and setting up a home office space, the rules are similar, you can only claim expenses that directly relate to you earning your income.
If you’re reading this article, you are probably wondering “Can I claim office furniture on my taxes?”
Can I Claim Office Furniture on My Taxes?
In short, yes!
It doesn’t matter if you’re working from home, you’re running a small business or you’re an employee of a large organisation. As an Australian taxpayer, you are potentially eligible to claim a tax deduction for office furniture expenses, which may result in a refund of taxes you have paid or a reduction in your tax payable, depending on your circumstances. Sole traders, those in partnerships and companies can all make tax deductible office furniture claims through their necessary tax return lodgings.
As a business owner, you can claim a tax deduction for most expenses incurred from carrying on your business, as long as they are directly related to earning your assessable income. Office furniture? Well, it’s pretty clear that you or your employees would not be able to carry out the necessary work without relying on functional workplace furniture.
If you’ve purchased office furniture such as office desks, shelving, office chairs and storage that is used in running your business, you can claim tax deductions if the following conditions are met:
- The expense must be for business, not private use
- If the expense is for a mix of private and business use, you can only claim the portion that is used for business
- Business owners must keep records to prove expenses
Generally speaking, office furniture is classed as a capital expense. Capital expenses are the costs you incur buying assets that have a useful life over a number of years. As well as office furniture, this includes things like machinery, vehicles, patents, books, and general equipment. As the asset will be used in your business over a number of years, the tax deductibility will reflect this through a depreciation expense which claims the cost of the asset as a tax deduction over the same period the asset will be useful.
As an employee, you can also claim a tax deduction on home office furniture items like chairs, desks and storage – so long as you have not already claimed these expenses with your employer.
Can I Claim Home Office Furniture on My Taxes?
If you’re wondering “Can I Claim Home Office Furniture on My Taxes?”, the guides around home office furniture tax claims have recently changed. If you operate a business from home or are now working from home, there are a number of home office-based expenses that can be claimed for tax deductions. With so many of us working from home more often, there are several home office expenses you may claim as tax deductions. Home office equipment tax deductions include:
- Phone and internet expenses
- Computer, desktop consumables and stationery
- Home office equipment and furnishings
Given that so many of us have had to move to remote work during the COVID-19 pandemic, it’s likely that you may have invested in some new home office equipment and furniture. Whether it be a new chair, laptop, stationery or desk accessory, it’s very likely that you’ll be able to make a claim for tax deductible home office furniture and equipment.
Home Office Equipment Tax Deductions
How do home office equipment tax deductions work? Well, the ATO has thankfully set aside home office guides for those who are incurring working from home expenses. Generally speaking, home office furniture claims are based on your work-related percentage use and will result in a deduction of:
- The full cost of the items, if they are less than $300 or
- The decline in value or depreciation for items over $300
Suppose you’ve recently set up your home office with office furniture items like a new desk, ergonomic chair, shelving and organisational accessories. In that case, you may be eligible to claim a deduction for the decline in value of that furniture to the extent that it relates to your work activity. The “effective life” of the asset or furniture piece will allow you to claim a proportional deduction for each work-related item over its useful life.
Capital items, such as office furniture pieces that are costing less than $300, can be written off in full immediately (limited to your work-related use percentage) and do not need to be depreciated.
According to the ATO, the guidelines for claiming working from home expenses has changed for 2022-2023. The shortcut method can no longer be used, making it a little bit trickier for taxpayers to calculate. The fixed-rate method has been revised and the actual cost method remains unchanged. The actual cost method requires you to work out and claim the actual cost incurred and depreciation for each separate expense such as furniture and utilities. The fixed-rate method is simpler to calculate but only applies to consumables and utilities, requiring you to calculate depreciation on capital items such as office furniture separately. Whichever one you choose, you’ll need to keep accurate records of your expenses and pay close attention to the ATO’s guidelines.
Claiming Office Furniture on Taxes
Regardless of whether you’re working from home or you’re a small business owner with a commercial space, office furniture is a fundamental element for how you or your business will generate income. Therefore, it is very likely that all office furniture items that you purchase for commercial, business and work-related use will be tax deductible to some extent.
If you want to claim office furniture on your tax return, you need to keep strict and accurate records of your office furniture expenses and business or work use, whether it be for your home office or your commercial space. The ATO is very diligent when it comes to tax deductions – it’s very common for people to have insufficient documentation to support office furniture tax deduction claims. Be sure to keep accurate records of all of your office expenses to ensure that you are able to lodge a clear, concise and correct claim for your office equipment.
Luckily, purchasing through Epic Office Furniture means you will have a handy digital invoice to file and refer to come tax time.
Epic Office Furniture
Looking to set up your new office space or finally invest in some quality home office furniture? You’ve come to the right place. Epic Office Furniture is the leading online retailer for the best commercial quality office furniture and equipment in Australia, with fast shipping to most of the country!
From our office chairs to our organisational desks and full office fit-outs, we’ve got every piece of equipment you could possibly need to furnish your workspace. What’s more, you’ll be able to work in comfort and style, rest assured that the office furniture pieces are eligible for tax deductions! If you have any questions about our furniture, do not hesitate to get in touch with one of our friendly team members today. And if you need help with your taxes, we suggest you contact the ATO and/or an accountant!
*This is general information only and does not constitute taxation or legal advice. Seek professional tax and/or legal advice to determine whether you are eligible to make a tax deduction claim for any purchases.