Committed to your future.

Home office deductions Part 2: Keeping 4 week representative records

Tuesday 13 June 2017

The first part of this article talked about what substantiation the ATO would accept when claiming home office deductions.  One method relies on keeping a four week representative record.  Provided here is more information about what these records are and what the ATO expects.

Claims exceeding $50
The ATO requires a taxpayer to keep records for a four-week representative period in each income year in order to claim a deduction of more than $50. The taxpayer can choose to keep records for longer than four weeks or to base their deduction on itemised bills (see previous article) for the entire year for a more accurate deduction.

The four-week record is merely the minimum amount of record-keeping that the ATO will accept. It is not a legal requirement to produce a time-limited representative record like the 12 week log book for car expense deductions. Remember to adjust the deduction for periods of leave taken.

According to an ATO fact sheet, the ATO will look favourably upon evidence that the employer expects the taxpayer to work at home or make work-related calls. But be aware that employer expectation is not a legal requirement. Under legislation and taking into account common law covering work-related expenses, it is enough that the expenditure is incurred in the course of producing assessable income and is not private, domestic or capital in nature.

Claims of $50 or less
Claims of $50 or less are not generally subject to substantiation checks by the ATO (although it is not explicitly stated). This however only affects the substantiation of the amount, and does not change the fact that the amount still has to be deductible under law.

Therefore it would be prudent for the taxpayer to be able to show that they had a reasonable basis for making the claim (for example, to keep evidence that some work was done at home during the year).

Home office deductions Part 2:  Keeping 4 week representative records Back