The ATO has identified that some taxpayers are incorrectly claiming rent, mortgage interest and other occupancy expenses as part of their work-from-home expenses.

To claim occupancy expenses, a taxpayer must be able to demonstrate that:

• the area of their home they used for work purposes is a 'place of business';
• if they are an employee, it was necessary for them to work from home because their employer did not provide an alternative 'place of business' to work from; and
• the nature of their income-earning activities requires them to have a 'place of business'.

Factors that may indicate whether an area has the character of a 'place of business' include whether the area is:

• clearly identifiable as a 'place of business';
• not readily capable of private or domestic use;
• exclusively or almost exclusively used for carrying on a business; and
• used regularly for client or customer visits.

Taxpayers who are eligible to claim occupancy expenses can claim a portion of those expenses based on floor area, the period they worked from home, and their ownership of the property.