Business owners who operate their home-based business through a company or trust structure have some extra considerations, such as fringe benefits tax and making sure they are correctly recording and reporting business money if it is used to pay personal expenses in the home. 

Running your home-based business through a company or trust

If you’re running your home-based business through a company or trust, you work out the types of expenses the business is entitled to claim. The next step is to consider who you are paying those expenses to and whether it is a direct reimbursement of the cost incurred in running the business or whether more is being paid for something else (such as for private expenses). If you are running a home-based business, usually ‘you’, as the business owner, will also be the person who owns the home or is paying rent for the home. Your home-based business, as a separate legal entity, will pay you for the space it rents from you and for the other expenses the business incurs in operating from the home.

Running your home-based business as a company or trust

If you run your home-based business as a company or trust, your business should have a genuine, market-rate rental contract (or similar agreement) with the owner of the property. The agreement will determine which expenses the business pays for and can claim as a deduction.Generally, the agreement will cover running and occupancy expenses.

If there isn’t a genuine rental contract, there may be tax implications for you (as the homeowner and individual receiving payment from the business) and the business for providing benefits to you. For more information, you can view the course ‘Using your business money and assets’.