Home-based business – Part 6
Records for change in circumstances
Regardless of the method you choose to use to calculate your expenses for working from home, you will need to have records.
If your circumstances change part way through the income year – for example, your usual pattern of work from home changes – you will need to keep separate records to show this change.
If you use the four-week representative period to calculate your usage over the income year, you will need to either:
- complete a new four-week representative period to show your usage in your new circumstances
- keep separate records for the period your circumstances changed.
For example, if you usually work from home one day a week and due to an emergency situation, such as COVID-19 or bush fires you’re required to work from home for a period, you will need to separate keep records for both situations. This includes:
- the actual hours you’ve worked from home due to the emergency situation
- your usual working from home arrangements.
Your four-week representative period will no longer be valid in these circumstances.
Simpler depreciation for small business
You can choose to use the simplified depreciation rules if you have a small business with an aggregated turnover (the total normal income of your business and that of any associated businesses) of less than:
- $10 million from 1 July 2016 onwards
- $2 million for previous income years.
Simplified depreciation rules for small businesses include:
- an instant asset write-off for assets that cost less than the relevant threshold
- a general small business pool for assets that cost the same or more than the relevant threshold, which has simplified calculations to work out the depreciation deduction.
Changes from 12 March 2020
From 12 March 2020 until 30 June 2020 the instant asset write-off:
- threshold amount for each asset is $150,000 (up from $30,000)
- eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).
From 12 March 2020 until 30 June 2021 the Backing business investment measure provides a time-limited (15-month) investment incentive to support business investment and economic growth, by accelerating depreciation deductions. The key features of the incentive are as follows:
- The benefits are either
- Deduction of 50% of the cost or opening adjustable value of an eligible asset on installation. Existing depreciation rules apply to the balance of the asset’s cost.
- If you are using the simplified depreciation rules for small business, you can claim 57.5% of the cost of the asset in the first year you add the asset to the small business pool.
- Eligible businesses – businesses with aggregated turnover below $500 million.
- Eligible assets – new depreciating assets (for example, plant, equipment and specified intangible assets, such as patents). The assets must be first held, and first used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021. Some exclusions apply.