Tax, insurance, finances and dispute resolution

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Tax deductions and liabilities

It is recommended that you obtain advice from an accountant, solicitor and/or business advisor to assist you with identifying the tax implications and benefits of operating a business from home and particular deductions relevant to your specific circumstances.

However, in general there are some potential tax deductions and liabilities for home businesses.

Potential deductions

The Australian Tax Office may allow business owners to claim deductions related to the following business expenses.

Costs related to running the business:

  • Electricity use
  • Phone use
  • Use of printer consumables (e.g. cartridges)
  • Cleaning

Costs related to occupying the building or buildings that the business operates in, where the business has set aside an area of the building for business activities only:

  • Rent
  • Mortgage interest
  • Insurance premiums
  • Council rates

Potential liabilities

The Australian Tax Office may require landowners that operate a home business to pay:

  • Capital Gains Tax on the sale of the building where the business operates
  • Land tax on an ongoing basis

For more information, see the Australian Tax Office’s webpage for home businesses.

Insurance

Running a home business can be both challenging and rewarding, but it can also expose you to financial risk. Having the right insurance helps to manage risk, protect your livelihood and provides you with peace of mind. You should speak to an insurance expert or business advisor to ascertain your insurance needs.

Be aware, a home and contents insurance policy may be for residential use only and may not necessarily cover any aspects of your home business. Depending on the type of business you are running, you may need to consider business-specific insurance.

One size does not fit all

Not all types of insurance will be right for you depending on the type of business you are operating. Some insurance companies offer packages that could meet your needs, but you may need to look at individual policies to find the right coverage. You may also wish to shop around to compare prices and the benefits and exclusions under each policy.

Insurance types

For information on common types of business insurance, including information specific to home businesses, please visit the Understand Insurance webpage.

For further assistance

If you’d like to speak with an insurance broker to discuss your business risks and understand your options, please contact the National Insurance Brokers Association or the Insurance Brokers Network of Australia.

If you would like to contact an insurance company directly, you can find an insurer via the Insurance Council of Australia.

Insurance brokers are legally obligated to provide advice and guidance in your best interest, whereas insurance agents may act in the interests of the insurance company. If you have a dispute with your insurer, you can contact the Financial Ombudsman Service Australia who can offer dispute resolution.

Financial management

Good financial management practices can help your home business maintain financial stability and growth.

The Australian Securities & Investments Commission’s MoneySmart website has a range of tips and resources to help in your financial management and budgeting.

NSW Government’s ‘Faster Payment Terms’ policy

The NSW Government has committed to faster payments. Payments up to $10,000 will now be paid instantly by credit card. Registered small businesses that supply to in-scope government departments will also be paid within 20 calendar days of central payment departments receiving a correctly rendered invoice for goods or services provided for between $10,000 and $1 million. Faster payments will be in place by the end of 2018.

After 31 December 2019, payments will be made within 5 business days of receipt of a correctly rendered invoice, unless an existing contract or standing offer provides for an alternative time period. Find out more about the Faster Payment Terms Policy.

Dispute resolution

Commercial disputes related to your home business can disrupt your business, damage your reputation and cost you a lot of time and money.

The NSW Small Business Commissioner provides mediation and dispute resolution services for businesses caught up in all types of commercial disputes.

To discuss your issue or for more information, contact 1300 795 534 or we.assist@smallbusiness.nsw.gov.au

Contracting

It may be useful for your home business to have a written contract between you and your customer or between you and other businesses. Written contracts reduce the risk of misunderstandings and future disputes.

For further information about contracts, including your home business contractual obligations, visit the Australian Government’s Business website.