Given the recent shift towards remote working environments, many Australian taxpayers have transformed spaces within their homes into fully functional offices. This transition raises the question: Can office furniture be expensed for tax deductions in Australia? The simple answer to this is — yes, you can. The cost incurred towards office furniture can often be claimed as a deduction, provided certain rules are followed.

This guide will walk you through deducting expenses for your office furniture in Australia.

Understanding Office Furniture Deduction

Whether a business operates from a commercial location or from a home office, office furniture forms a crucial part of the assets facilitating operations. Purchase, maintenance, and upgrade costs related to office furniture may be considered deductible under Australian tax law.

Immediate Expense Deduction

The Australian Tax Office provides a facility for small businesses to claim an immediate deduction for assets that cost less than $30,000 each, given the business has an annual turnover of less than $10 million.

This immediate deduction allows businesses to fully deduct the cost of depreciating assets in the year of purchase, which could include office furniture. However, all such purchases and deductions must be primarily for generating assessable income and must be appropriately documented for follow-up tax audits.

Home Office Furniture Deduction

Home office expenses, including furniture, are tax-deductible, given that you use your home office exclusively for generating income. Any expense you incur over time, such as the declining value of a desk or a chair, can be included in these deductions.

You can calculate home office expenses using two methods:

  • Fixed-rate method: A fixed rate of 52 cents per hour, in addition to phone and internet expenses, computer consumables, stationery, and the decline in value of a computer, laptop, or similar device.
  • Actual cost method: An actual running expense based on a specific calculation, usually documented on a diary basis.

Note that if you are an employee working from home, you cannot claim occupancy expenses like rent, rates, or home insurance premiums.

Points To Remember When Claiming Furniture Deductions

It’s crucial to bear in mind the following pointers when planning to claim your office furniture deductions:

  1. Exclusive Business Use: The furniture, whether at your commercial or home office, must primarily be used for business-related activities. Items used for both private and business purposes may only have their business proportion of use deducted.
  2. Timeliness of Purchase: The office furniture must be bought, used, or installed to generate assessable income in the same income year you claim a deduction.
  3. Maintain Records: It is essential to maintain proper records, such as receipts, invoices, and other documents, to evidence the claims made in your tax returns.

Seek Professional Advice

The tax sphere, with its intricate rules and exceptions, can be daunting to navigate on your own. Engaging with a professional tax advisor or an accountant can provide value, helping you maximize your deductions and minimize the risk of costly mistakes.

Concluding Thoughts

While the cost of office furniture can be claimed for tax deductions in Australia, the rules surrounding it are complex. The content of this blog should serve as a guideline. However, consulting a tax professional to best understand your tax position is essential. By understanding and applying these tax laws correctly, you can substantially offset the costs of your office furniture investment while staying within the bounds of the Australian tax law.