The Australian government has a range of tax-related programs that can help you to save money as a business owner or employee working from home. Older Australians or people with disabilities are entitled to a capital gains tax exemption. Check below for more detailed information.
Working from a cabin in your own backyard has more benefits than escaping traffic and enjoying a slower morning routine, as a separate home office space could be tax-deductible. Small business owners can write off a work-related asset instantly, and the employees working from home can also claim expenses related to their work.
Instant asset write-off for Business
Determine if your business qualifies for the instant asset write-off to claim a deduction on asset costs. The thresholds have changed in recent years – see the details below.
So, if you have a business with an aggregated turnover of less than $500 million and if you can prove your asset is:
- work-related and
- Purchased, installed, and ready for use until the end date.
You are eligible to use simplified depreciation rules and claim the immediate deduction.
Check the thresholds for different date ranges below.
Date ranges and thresholds for asset first use or installation
| Date range | Threshold |
| 1 July 2023 to 30 June 2025 | $20,000 |
| 12 March 2020 to 30 June 2023, provided the asset was purchased between 7:30 PM (AEST) on 12 May 2015 and 31 December 2020. | $150,000 |
The Australian Government was assisting businesses by raising the asset threshold that can be instantly written off as a business expense from $30,000 to $150,000 for each asset.
Tax treatment: Plant and Equipment vs. Buildings
As this Tax scheme excludes buildings, for a cabin to be classed as a ‘Plant and Equipment’, it would have to be a free-standing unit attached to the premise only for the cabin’s temporary stability. Building a cabin as a demountable or non-fixture structure will have no implications on Capital Gains Tax (CGT) in the future when you sell your home.
Most of our backyard cabins in sizes of up to 20 m² will fit this tax scheme, costing as low as $19,500 for a small cabin kit or a fully installed 20m² cabin within $58,000 price range. As well as an office, cabins can also be useful for business-related storage shed, a workshop, maybe a portable gallery or space as a work-related purchase. Talk to your nearest cabins builder about the many possibilities. But before making enquiries, check with your accountant for professional advice first.
Find your perfect backyard workspace today – explore our range of stunning cabin designs and pick your favorite!
If you own a small business and need more space to improve your business, building a backyard cabin could be justified just like the other six most surprising items businesses claimed under the scheme. As long as you can adequately explain the usage of the item is work-related, even the latest Xbox, PlayStation, and Nintendo game consoles, children’s pillows, doona covers and pajamas, decorative wall hangings, bedding, and night lights can be legitimately claimed.
Get inspired for your own backyard office; check out our Home Office case studies now!
Tax deductions for employees
If you are an employee and are working from your backyard home office, work-related expenses may be claimed to reduce your income tax. Work-related expenses include the cost of using equipment and utilities. If you have an outdoor cabin built as a demountable structure, it may be classed as a piece of equipment and depreciated over time.
When using your separate backyard home office space for work only, you may be able to fully claim costs of the decline in value of other equipment and furniture in your workspace. Also, other expenses such as electricity and gas for heating, cooling, and lighting; phone and internet; and other running expenses, including computer consumables (such as printer paper and ink) and stationery.
But first, get professional advice specific to your circumstances to make sure you can reduce your tax with having a home office built in your backyard.
Capital Gains Tax exemption for granny flats
From 1st of July, 2021 The Government announced capital gains tax (CGT) exemption for granny flat arrangements to support older Australians and those with a disability. This change will apply to agreements between family members or other personal ties, but will not apply to rental granny flat arrangements. This measure is aimed at reducing the risk of abuse to vulnerable Australians in cases like family breakdown by removing the CGT impediments.
Get in touch with your nearest granny flats builder for more information and get help starting your project now!
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References
For older Australians or people with disabilities
- CGT exemptions set to apply to granny flat arrangements link
- Supporting older Australians – exempting granny flat arrangements from capital gains tax link
For Business
- Instant asset write-off extension link
- Instant asset write-off for eligible businesses link
- Businesses given beefed-up asset write-off in $300m expansion link
- Deductions you can claim link
- Home Office Deductions link
For Employees
- Working from home deduction changes for 2022-23 link
Disclaimer
Information in this article is a general in nature and does not take into account your situation, is not a substitute for professional advice. You must not rely on the information in this article as an alternative to legal advice from your accountant, registered tax agent or other professional legal services provider. Please consult with a professional tax agent before the purchase.
