A lot of sole traders claim a home office deduction. A lot of them claim it wrong.
The ATO has two methods, the fixed rate method and the actual cost method. Most people pick one without understanding what it covers, then either overclaim and expose themselves to a review, or underclaim and leave money on the table.
The fixed rate method is 70 cents per hour for every hour you work from home. It covers electricity, internet, phone, and stationery. Simple, but it excludes occupancy costs like rent or mortgage interest, which means if you have a dedicated work room, you might actually be better off with the actual cost method.
The actual cost method lets you claim a portion of your rent, electricity, internet, and depreciation on furniture based on the floor area your office takes up as a percentage of your home. It takes more work to calculate but it's often worth it.
What catches people out is thinking they can claim both, or mixing up what each method includes. You pick one and stick with it for the year.
Keep a diary. The ATO wants evidence you actually worked those hours. A rough log in your phone is enough. You don't need a spreadsheet with timestamps, but you need something.
If you're not sure which method suits your situation, that's worth a conversation with an accountant before June.
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