Home Business Running Costs: Keep a Useful Work Diary
Keep a dated record of the hours you actually work at home and the activities you do, then connect it to the bills and usage evidence required by your chosen method. A shared kitchen table and a dedicated business room do not create the same expense pattern. Decide the method before assuming a sample diary is enough.
What you’ll get from this guide: Set up a diary and bill index for home business running costs without treating every household cost as a business expense.
- Record actual work and breaks while you can still check the details.
- Keep bills alongside the diary rather than relying on hours alone.
- Review the method when the room, household use or work pattern changes.
This diary is for a sole trader or partnership preparing home business running-cost records. Companies and trusts should get advice on their own arrangements before using the same approach.
Record the work before estimating the expense
Use your calendar or a simple sheet to record start and finish times, breaks and the task. Only enter the time spent on the business, even if you were home all day. Shopping, household jobs and time away from the desk need their own treatment in the record.
Note which space you used and whether other household members used it at the same time. That helps explain why the heating was on or whether an internet connection served several people.
Fictional sole trader. This is an extract only; omitted days are not assumed to be workdays.
| Day | Actual business hours | Activity and space | Supporting evidence |
|---|---|---|---|
| Monday | 4.5 | Quoting in dedicated office | Calendar Q41; power bill E9 |
| Tuesday | 2 | Supplier calls at shared kitchen table | Call log P12; household also using room |
| Wednesday | 0 | No home business work | Work performed at customer premises |
| Thursday | 3.5 | Bookkeeping in dedicated office | Calendar A18; power bill E9 |
| Friday | 1 | Order emails in shared living room | Activity log; internet bill I9 |
The extract totals 11 hours. Those hours do not, by themselves, establish additional household costs or a tax deduction.
Match the diary to the expense method
Under the ATO's current home business guidance, the fixed-rate method requires a record of actual hours for the full income year, not a representative four-week sample, plus evidence for the included expenses. The rate bundles specified running costs, so recording a separate phone bill is not a reason to claim it twice.
The actual-cost method needs the relevant bills and a supported business-use calculation. A diary suitable for sampling phone use is not automatically suitable for estimating electricity or proving full-year hours. Check the sole trader and partnership guidance against the specific cost before choosing the record period.
Give every bill a reference
Keep the bill, its coverage period, the amount and the proposed allocation basis together. Someone opening a folder called “home office” still needs the calculation behind each bill.
For heating or equipment, record the usage information supporting the calculation rather than applying a room-size percentage to every household expense. For shared communications, build a separate phone and internet usage sample.
Home business diary and bill index
Copy the template, save a text file for offline use, or print this page with its examples and sources. Fill in your own copy and check it before relying on it.
Date Start and finish Breaks excluded Actual business hours Activity Room Shared household use Bill reference Method-specific evidence Method under consideration: Income year: Changes, holidays and days away: Questions for tax agent:
Revisit the file when the arrangement changes
Record moving house, changing rooms, a new household member, holidays and a shift from home work to customer-site work. Don't carry an old pattern into a different arrangement without checking it.
Keep mortgage interest, rent, rates and other occupancy questions separate from this running-cost diary. They can raise different eligibility and capital gains tax issues. The home business rules guide covers the wider setup; your tax agent needs the actual arrangement to advise on a claim.
Key takeaways
- Record actual work and breaks while you can still check the details.
- Keep bills alongside the diary rather than relying on hours alone.
- Review the method when the room, household use or work pattern changes.
Where to get help
Use the ATO sources above with your registered tax agent to confirm the method and required records. The tax records hub groups the other evidence worksheets.
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Where to go from here
Phone and Internet Business Use: Support the Percentage
Continue the “document expense allocations and timing” reading sequence.
2 min readTraining Expenses: Document the Link to Your Business
Continue the “document expense allocations and timing” reading sequence.
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General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.