Home Office - The New Square Metre Rate
Currently, when calculating your home office area expense we ask that you let us know all your costs associated with your home office, as well as your home office area and your total house area and calculate the actual home office cost from this. In an effort to make tax simpler, the IRD has developed an alternate option to be used when calculating your home office expense.
A specified square metre rate of $41.10 has been developed by the IRD, which is based on the average cost of utilities (but excludes mortgage interest, rates and rental cost).
Using this rate, your home office cost would be calculated in two steps. Firstly the above rate is multiplied by your home office area. We would then ask you for your mortgage interest and rates/rental cost, and then calculate this based on your home office area and your total house area. The results of both steps above would be your home office cost.
It may be more advantageous to use this method than the traditional method, however there could be implications if you also claim a portion of your home phone and internet in the business as the IRD rate includes home phone as part of it's utilities.
This was last updated 7 December 2018.