As a general rule, expenses associated with a taxpayer’s home are of a private or domestic nature and do not qualify as deductions for taxation purposes. An exception to this general rule is where part of the home is used for income producing activities and has the character of a ‘place of business’. In such cases a portion of the expenses incurred can be deductible such as house and contents insurance, interest on loan, repairs, rent and council rates.
4 factors to consider when determining a ‘place of business’:
- The area is clearly identifiable as a place of business;
- The area is not readily suitable or adaptable for use for private or domestic purposes in association with the home generally;
- The area is used exclusively or almost exclusively for carrying on a business; or
- The area is used regularly for visits of clients or customers.