Home-Based Business in Australia: Council, Insurance and Tax Rules

You can run a business from home in Australia without council approval in most cases, provided it stays small and quiet: no more than a couple of non-resident staff, a modest floor area, no real signage or traffic, and nothing that bothers the neighbours. The catches are everything else that comes with the address: your home insurance won't cover the business, the home office tax rules turn on whether part of your house is a "place of business", and putting your home on public registers has a privacy cost.

Council rules: what "low impact" means where you live

Planning law is state-based and applied by your council, so the exact limits sit in your council's planning scheme (in NSW, the local environmental plan or LEP). The categories are similar everywhere: a home occupation is you with no outside staff, a home business allows a few non-resident workers and modest space, and a home industry covers light workshop activity and usually needs a permit.

Victoria's rules are the clearest example because they sit in one state-wide clause (52.11). No planning permit is needed if all of these are true (as at September 2026):

Condition	Without a permit
Who runs it	You, and the home is your principal place of residence
Non-resident workers	No more than 2 at any one time
Floor area	Up to 100 sqm or one-third of the dwelling, whichever is less, including storage
Vehicles	One commercial vehicle up to 2 tonnes, not fuelled or repaired on site
Goods	Only goods made or serviced in the business sold from the premises; goods offered for sale online are excepted, but must not be collected from the dwelling; nothing visible from outside
Amenity	No utility load beyond domestic use; no noise, fumes, parking or hours that hurt neighbours

A permit can stretch that to three non-resident workers and up to 200 sqm for storing goods or materials. One non-illuminated business identification sign of up to 0.2 sqm needs no permit under the signage provisions; anything larger does.

In NSW, the Codes SEPP lets home occupations, home businesses and home industries run as exempt development (no approval) if they meet the state standards and stay under the floor area cap in clause 5.4 of your council's LEP. Small-scale online retail of items you didn't make is allowed; food manufacturing and skin penetration are never exempt. Other states set their thresholds through council planning schemes with the same shape: a cap on non-resident staff, a floor area limit, one small sign at most, nothing stored or displayed outside, and no impact on parking or amenity. If you're close to any limit, ring the council's duty planner before you start. It's free.

Businesses that always need council contact

Any food business run from home (cakes, meal prep, catering) must be registered with or notified to the council under your state's Food Act before you sell anything. Beauty, hairdressing and skin penetration businesses need council public health approval on top of planning. The full list of licence layers is in do you need a business licence?

Strata and tenants

Council approval is only one permission. In a strata or body corporate scheme, the by-laws are a separate rulebook. Many schemes use a standard by-law requiring you to notify the owners corporation of any change in the use of your lot, particularly one that could affect the building's insurance. Some older by-laws prohibit business use altogether except for the building manager. Changing a by-law needs a special resolution, which in NSW fails if 25% or more of the votes are against it, so a noisy or high-traffic business is unlikely to get through. Enforcement runs through a notice to comply and then the state tribunal.

If you rent, read the lease. Most residential tenancy agreements say the premises are to be used as a residence, and some expressly ban business use. Get the landlord's written consent before you start, and be specific about what the business involves.

Insurance: your home policy won't cover the business

Standard home and contents policies exclude liability arising from any business activity, and most also exclude stock, samples and home office equipment beyond a small tools-of-trade limit. "Business activity" is typically defined as anything done to earn an income, so it catches a side hustle as well as a full-time operation. You therefore need proper business cover, and you must tell your home insurer you're running a business from the property: non-disclosure can give the insurer grounds to reduce or refuse a claim, even one unrelated to the business.

What a home-based business typically needs:

• Public liability if clients, couriers or contractors ever come to the house, or you work at other people's premises.
• Business contents and stock for equipment, inventory and tools.
• Professional indemnity if you give advice, design or manage anything for a fee.
• Product liability if you make or sell physical goods.
• Workers compensation the moment you employ someone. It's compulsory in every state.
• Cyber if you hold customer data or take payments online.

Typical premiums and how to buy are in business insurance explained.

Tax: running costs, occupancy costs and the line between them

Running expenses: fixed rate or actual cost

Running expenses are the costs of using your home to work, and sole traders and partners can claim them two ways.

Fixed rate method: 70 cents per hour worked from home. That's the ATO's rate for 2025-26; as at September 2026 it hadn't announced a different figure for 2026-27. The rate covers energy, internet, phone, stationery and computer consumables, so none of those can be claimed separately. Depreciation on furniture and equipment, and repairs and cleaning of a dedicated work area, go on top. The condition is records: a log of your actual hours for the whole year (diary, timesheet or calendar), not an estimate or a four-week sample.

Actual cost method. You work out the business share of each running cost, usually by floor area and time, and keep the bills. It's more work but can pay more for a dedicated room used all day. If you trade through a company or trust the rules differ, so have your accountant set that up.

Occupancy expenses: only for a genuine place of business

Occupancy expenses are the costs of the home itself: mortgage interest, rent, council rates, land tax and home insurance. You can claim a share only if part of your home is a genuine place of business, not simply a convenient place to work. The ATO looks at whether the area is clearly identifiable as business premises, isn't readily suitable for private use, is used exclusively or almost exclusively for the business, and is regularly visited by clients. A salon in the converted garage can qualify; a spare bedroom with a desk almost never does.

Everything else you can claim is in the small business tax deductions list, and the sole trader tax and deductions guide walks through the home office methods in detail.

The CGT trap when part of your home is a place of business

Your home is normally exempt from capital gains tax under the main residence exemption. Using part of it as a place of business takes part of that exemption away.

The ATO applies an interest deductibility test: if you are, or would be, entitled to claim part of the interest on your home loan because that part of the home is a place of business, the same proportion of any capital gain is taxable. It doesn't matter whether you actually claimed the deduction, or whether you have a mortgage at all. The taxable share is based on the floor area used for business and the period it was used that way, so 15% of the floor area used for six of twelve years of ownership exposes roughly 7.5% of the gain. The flip side is reassuring: if you work from a spare room, claim the 70c fixed rate and aren't entitled to occupancy costs, your exemption is untouched.

Don't count on the small business CGT concessions to rescue you. They need the property to pass the active asset test (used in the business for at least 7.5 years, or half your ownership period), and the ATO's stated view is that where business use is incidental to the home's residential purpose, the concessions generally don't apply. Its examples put a part-time salon using 7% of the floor area on the wrong side of the line and a 50% business-use ground floor on the right side.

Before you convert a room into a dedicated place of business, ask your accountant to model the occupancy deduction against the future CGT cost. It often isn't worth it.

Your address, the public registers and privacy

Registering the business puts your address into government systems, and some of it is public.

ABN. You must give the ABR the physical address of your main place of business, and a home office counts. Only the state and postcode appear on ABN Lookup; the street address, phone and email don't. See how to register an ABN.

ASIC business name register. The register shows your principal place of business and your address for service of documents. If you're a sole trader and your principal place of business is your home, ASIC shows only the suburb, state and postcode. The service address is fully public, so use a PO Box or your accountant's address for that field; ASIC suppresses details only where publication would be a serious safety risk.

Companies. A company's registered office and principal place of business must be physical Australian addresses and both are public; the registered office can't be a PO Box. Director residential addresses appear in paid company extracts unless suppressed on safety grounds, which is why many home-based directors use their accountant's office as the registered office.

Everything else. Your website, invoices and Google Business Profile are where customers actually look you up. A service-area business can hide its address on Google; for the rest, a virtual office gives you a business address and mail handling for roughly $25 to $60 a month on a basic plan (as at September 2026).

Key takeaways

• Most quiet, low-traffic home businesses need no council approval, but every state caps non-resident staff, floor area, signage and visible goods. Victoria allows two non-resident workers and 100 sqm without a permit (as at September 2026).
• Food, beauty and skin penetration businesses always need council registration or approval.
• Strata by-laws and leases are separate permissions. Notify the owners corporation and get the landlord's consent in writing.
• Home and contents insurance excludes business liability and usually business equipment and stock. Buy business cover and tell your home insurer.
• Claim running costs at 70c per hour with a full-year hours log, or by actual cost. Claim occupancy costs only for a genuine place of business, knowing that share of your home is then exposed to CGT whether or not you claim.
• Only your state and postcode show on ABN Lookup, but your ASIC service address is public. Use a PO Box, accountant or virtual office for anything the public can see.

Where to get help

• Your council's planning department — most publish a home-based business fact sheet, and the duty planner will tell you whether you need a permit.
• ATO: Deductions for home-based business expenses — running and occupancy expenses, with the CGT implications page linked from it.
• ATO: Working from home expenses — the current fixed rate and record requirements.
• ASIC: Personal information on the registers — what's public and how to request suppression.
• business.gov.au — the ABLIS licence finder for council, state and federal requirements.
• Your accountant — before you claim occupancy costs or convert a room into a place of business, and if you trade through a company or trust.
• An insurance broker — to combine home, business contents and liability cover without gaps.