Tax Deductions for a home buisness

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Forums › Finance and wealth management › Tax Deductions for a home buisness

itxtme

2102 posts

Uber Geek

#101692 6-May-2012 21:43

Just wondering if anyone has a list of accepted tax decution amounts from the IRD. Looking at things like Internet, and mobile phone.

I know they have an accepted 50% rule for shared buisness/home phone. I remember reading a book a couple years back about tax deductible expenses, but when you try to find info on the latest accepted rates I have come up blank..

PS I do my own taxes, so while I appreciate that seeing an accountant would cover this, I want to continue doing my own, and want some data sheets etc that others use. Failing this I will give the IRD a call.

stuartcharters

14 posts

Geek

#620709 6-May-2012 22:25

Try

http://www.ird.govt.nz/business-income-tax/expenses/homebus-exp/

itxtme

2102 posts

Uber Geek

#620725 6-May-2012 23:44

Thanks for your reply, I have seen that, as you can see on that page it indicates a set agreed amount for certain costs in the case on their the home phone at 50%. I am after a list of the agreed amounts for more items than just a home phone.

deliveryguy

42 posts

Geek

#620727 7-May-2012 00:03

Hi
Everything else is proportional to how much of the house is used for the business. Eg if house is 100 sq meters and office is 10 sq meters then you can claim 10% of rates, power, house insurance, mortgage interest or rent etc

jbard

1377 posts

Uber Geek

#620729 7-May-2012 00:03

itxtme: Thanks for your reply, I have seen that, as you can see on that page it indicates a set agreed amount for certain costs in the case on their the home phone at 50%. I am after a list of the agreed amounts for more items than just a home phone.

I do my own account as well but got some advice off my accounting friend.
She said for everything other than phone/internet the standard amount is 15% unless you can prove otherwise which involves keeping a log for 3 months.

itxtme

2102 posts

Uber Geek

#620800 7-May-2012 09:29

Thanks for the replies, I will follow up re. Internet as thats the big one for me, may even be cheaper to have two accounts to make it 100%...

sen8or

1787 posts

Uber Geek

#620805 7-May-2012 09:32

From what one accountant told us -

Internet is 100% claimable
Ph is 50% of line rental plus any business calls that you can identify

As stated above, the rest (rent / mortgage interest (note, not payment, just the interest portion), rates, insurance etc) is claimable at the % of the house that your home office occupies.

I haven't heard of a "15% rule", we claim 10% as there is also room for storage of records etc not in the office.

I tried to convince them once that we should be able to claim for our lounge (as we use it for watching movie previews etc) which would increase the % of the amount we could claim, but no dice

Speak to the IRD, they aren't that scary

jbard

1377 posts

Uber Geek

#620878 7-May-2012 11:02

sen8or: From what one accountant told us -

Internet is 100% claimable
Ph is 50% of line rental plus any business calls that you can identify

As stated above, the rest (rent / mortgage interest (note, not payment, just the interest portion), rates, insurance etc) is claimable at the % of the house that your home office occupies.

I haven't heard of a "15% rule", we claim 10% as there is also room for storage of records etc not in the office.

I tried to convince them once that we should be able to claim for our lounge (as we use it for watching movie previews etc) which would increase the % of the amount we could claim, but no dice

Speak to the IRD, they aren't that scary

sorry i should say you can claim upto 15% with no questions asked but if you want to claim more you need to justify it, say measuring your home office is a large percentage off your house.

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Chainsaw

357 posts

Ultimate Geek

#620886 7-May-2012 11:12

IRD offline? Site not working.

Edit: going now.

mule

209 posts

Master Geek

#620974 7-May-2012 13:34

You need to be careful in claiming expenses working from home.

There are no hard and fast rules and no 15% allowance. It all has to be based on evidence and every home based business will be different.

You can claim on actual usage eg business tolls or a second internet connection specifically for the business or there are other ways such as the home office claim to calculate the business portion.

The home office claim is an acceptable way to claim expenses based on the area of the office as a proportion of the house. You need to make sure this is accurate as the IRD has been known to come to houses to check where the home office and measure the area claimed. Assuming this is ok you are allowed to claim this portion of home costs such as phone rental, internet, electricity, rates, mortgage interest, repairs and maintenance, etc. You are no longer allowed to claim a proportion of house depreciation.

It might be simple for people to say "use common sense", but people get greedy and push the boundaries. You can complete your tax returns yourself, but be careful (the penalties can be huge) and don't be afraid to ask a professional.