Home Office Expenses Calculator Methods Vs Actual Cost Calculation Methods - Differ From Each Other?

 Author: CaroATO(Community Support)Community Support

17 Aug 2023

Hi @Toffeeriver,

There's no difference in the approaches taken between our web content on the Actual cost method and the Home office expenses calculator.

Our web content for the Actual cost method states the following about how this method works:

Using the actual costs method, you work out your deduction by calculating the actual additional expenses you incur when working from home. This includes expenses you incur for:

• the decline in value of depreciating assets – for example, home office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices.
• electricity and gas (energy expenses) for heating, cooling and lighting
• home and mobile phone, data and internet expenses
• stationery and computer consumables, such as printer ink and paper
• cleaning your dedicated home office.

Where you incur running expenses for both private and work purposes, you need to apportion your deduction on a fair and reasonable basis. You can only claim the work-related portion as a deduction (emphasis added).

The calculation method outlined under electricity and gas expenses in our web content and under ‘Actual running expenses’ in the home office calculator is, in our view, an appropriate way for calculating the actual additional cost of running an appliance or lighting while working from home.

However, as also noted in our web content, where an expense is incurred for income producing purposes and private purposes, it needs to be apportioned on a fair and reasonable basis. Another way of doing that might be to make a bona fide estimate based on a reasonable percentage of the household annual electricity or gas bill (see paragraphs 24 and 25 of Taxation Ruling TR 93/30 Income tax: deductions for home office expenses). If you're asked about your claim, you'll need to demonstrate that your estimate was bona fide based on all relevant factors, for example other householders use of electricity/gas, number of appliances running at any one time etc.

As such, ‘own estimate’ in the Home office expenses calculator is referring to apportioning your deduction on a fair and reasonable basis using an estimated work use percentage of your household electricity or gas expenses.

If you've another basis for calculating your electricity and gas expenses which allows you to estimate a fair and reasonable apportionment, you're more than welcome to use it.