Who can claim
This deduction is available to individuals and companies.
- The expense is incurred in carrying on an existing income-producing business.
- Any private, capital or non-income-producing component is reasonably apportioned or excluded.
- The premises cost relates to space used in carrying on the business.
What you cannot claim
- Do not include private drawings or personal expenses.
- Do not treat a capital asset, improvement or acquisition cost as an ordinary operating expense.
- Capital improvements, lease acquisition costs and private premises use require separate treatment.
- Home occupancy costs belong under the home-based business occupancy rule and must not be entered again here.
How the amount is worked out
Claim the deductible business-use portion for commercial or other non-home premises, applying prepayment and capital rules where relevant. Enter home occupancy costs once under the home-based business occupancy rule.
Records the ATO expects
- Lease
- Rates or rent invoices
- Payment records
- Apportionment basis
Where this rule comes from
Primary source: ATO business income and deductions (Updated 1 June 2023). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.
Supporting sources:
- ATO home-based business expenses (Updated 30 June 2025)