Claim Home Office Expenses in NZ
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It is common for small business owners to work from a home office (Garage office!). You may claim a portion of the expenses of your household expense into business, the fundamental rule is the portion of expenses that is directly linked to generate your business income.
List of things (but not limited to) you can consider claiming as home office expenses are
– Rent
– City council rate
– Mortgage (interest portion)
– Power/Gas/Water Utility
– Home Insurance
– Internet & Phone
– Security
* Note: there is no GST on residential rental and interest
To work out the numbers
Method one: Calculating based on the area percentage of your home office
You need to measure the area of the of the part of your house that you use solely for your business in square meter. And then measure the total area of your house in square meter.
Then you can get a percentage of your home office by: (Home Office Area / Total floor area of Home) x 100
And now you can work out the amount of home office expense that you can claim into business by Home Office Area percentage x household expenses.
Method two: Using the square metre rate
Instead of keeping all the records of your household expenses. The IRD provide a square metre rate option, that you can use the fixed square metre rate x the total area used for business. The rate for the 2021-22 tax year was $47.85 per square metre.
*Note: The IRD square metre rate does not include interest and rates or rent costs. You can claim interest, rates and rent on top of the IRD rate using method one.”
The final calculation equation is:
(total amount of mortgage interest, rates and rent x work-related proportion) + (total area used for business x square metre rate for the year)
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