Office Refurbishment Tax Deduction Australia

Can You Claim Office Refurbishment as a Tax Deduction?

Yes, in many cases, an office refurbishment is a tax deductible office renovation under Australian tax law. But how you claim it and how much you can deduct depends on how the Australian Taxation Office (ATO) classifies your renovation expenses.

Generally, the ATO breaks down refurbishment costs into three categories:

1. Repairs and Maintenance: things like repainting walls or fixing electrical faults. These are usually 100% deductible in the year they’re incurred.
2. Capital Works: more structural work, like building partitions or upgrading flooring. These are claimed over time through capital works deductions.
3. Depreciating Assets: equipment or fixtures like desks, lights, or air conditioning. These are written off over their effective life or instantly if they qualify for the instant asset write-off.

Understanding these categories is key to maximising your return and staying ATO-compliant. That’s why at Stemar Group, we work closely with tax professionals and quantity surveyors to help you plan a renovation that’s not just visually stunning, but also optimised to align with ATO deduction rules and deliver long-term financial return.

What Office Refurbishment Costs Are Deductible?

Understanding which office renovation costs are deductible and how the ATO expects you to categorise them is crucial for staying compliant and maximising your return. The business

renovation ATO rules make a clear distinction between repairs, capital works, and depreciating assets.

Here’s how the ATO typically classifies office refurbishment costs:

Repairs and Maintenance - Fully Deductible

If the work restores an asset to its original condition without improving it, it falls under repairs and maintenance. These expenses are immediately deductible in the year they’re incurred.

Examples include:

• Patching or repainting walls
• Replacing damaged tiles or carpets
• Fixing plumbing or lighting issues

Capital Works - Claimed Over Time

Capital works refer to structural improvements or building alterations that add value or extend a property's life. These must be claimed gradually, usually at 2.5% per year over 40 years, under the ATO’s Division 43 rules.

Common capital works include:

• Building new internal walls or partitions
• Upgrading the ceiling or floors
• Major plumbing or cabling installations

Depreciating Assets - Write Off or Depreciate

Items like furniture, fittings, or equipment are considered plant and equipment and fall under Division 40. These are depreciated over their effective life unless they qualify for the instant asset write-off scheme.

Examples:

• Office desks, chairs, storage cabinets
• Lighting and blinds
• HVAC systems and security cameras

At Stemar Group, we help our clients structure their renovation scope and invoices to match ATO classifications, making tax time simpler, cleaner, and more profitable.

Read also: How to Plan an Office Refurbishment (Complete Guide)

Claiming Deductions for Home Office Refurbishments

If you’re working from home either full-time or part-time. You may still be eligible to claim depreciation for your office fit-out, provided you meet the ATO’s criteria. But there are specific rules that apply to home-based businesses or to employees who use a portion of their homefor work.

The key factor? Apportionment. You can only claim deductions on the percentage of your home that’s used exclusively for income-producing purposes.

What You Can Claim

If the area is clearly used as a home office, you may be able to deduct:

• A portion of repair and maintenance costs (e.g. repainting or electrical work)
• Capital works deductions if you own the property (e.g. structural changes)
• Depreciation on fit-out items such as desks, chairs, storage, and lighting

By applying the correct business-use percentage and asset depreciation rate, you can legally and effectively claim depreciation on your office fit-out , reducing your taxable income.

What You Can’t Claim

• Renovations to areas used for personal living (kitchen, bathroom, lounge)
• The entire cost of a renovation, unless the space is 100% business use
• Capital works on a rental property (unless you’re the owner and using it for business)

At Stemar Group, we help professionals and business owners plan home office refurbishments with tax efficiency in mind, ensuring your upgrade looks amazing and delivers long-term value through optimised depreciation strategies and clearly categorised renovation costs.

How to Claim Office Renovation Deductions: Step-by-Step

Claiming deductions for your office renovation isn’t just about keeping receipts, it’s about classifying your expenses correctly, especially when it comes to capital works.

The ATO has specific guidelines for office renovation capital works, which refer to structural improvements that must be depreciated over time, typically at 2.5% per year for 40 years under Division 43. Misclassifying these costs can delay your deductions or result in compliance issues.

Here’s a simple breakdown to help you get it right:

1. Separate Capital Works from Repairs and Assets

When planning your refurbishment, make sure your builder or fit-out partner provides itemised invoices that clearly separate:

• Repairs and maintenance (e.g. fixing ceiling tiles)
• Capital works (e.g. constructing internal walls)
• Plant and equipment (e.g. office desks, blinds)

Tip: At Stemar Group, we structure our project quotes in alignment with ATO definitions, making your claims faster and easier.

2. Use a Quantity Surveyor for Capital Works Deductions

For large-scale office renovation capital works, a depreciation schedule prepared by a qualified quantity surveyor ensures:

• Accurate tax claims
• Compliance with ATO’s Division 43 rules
• Maximum return over the life of your asset

3. Keep Detailed Records

ATO compliance hinges on having:

• All invoices and receipts
• “Before and after” photos
• Proof of business use (e.g. floor plans, usage logs)

4. Work with a Tax Professional

Partner with a tax agent who understands small business deductions and can:

• Apply the correct depreciation rates
• Apportion claims for home or shared-use spaces
• Claim eligible costs under the instant asset write-off scheme

By following these steps, and working with a fit-out expert who understands tax strategy. You’ll ensure your refurbishment delivers measurable financial returns through properly claimed tax deductions, beyond just visual improvements.

Read also: Complete Guide to Building Project Management

Common Mistakes Businesses Make

Office renovations can be complex, and without a clear understanding of ATO guidelines, businesses often make costly errors that reduce or delay their deductions. Here are the most common mistakes we see when clients come to us after the fact:

1. Treating All Costs as Immediately Deductible

Not all renovation costs can be written off in the same year. Structural changes are typically classified as capital works and depreciated over decades. Many business owners incorrectly claim them as repairs, which can trigger ATO audits.

2. Overlooking the Instant Asset Write-Off

The instant asset write-off can provide a significant tax benefit, but it’s often underused. Businesses may not realise that items like desks, blinds, and even some lighting systems can be claimed in full, provided they meet the ATO’s criteria.

3. Failing to Apportion Home Office Use

For home office refurbishments, forgetting to calculate the business-use percentage could result in your claim being rejected or, worse, leading to an overclaim. Accurate floor plans and usage logs are essential.

4. Skipping a Depreciation Schedule

Without a tax depreciation schedule (especially for larger renovations), you might miss out on thousands in long-term claims. This is especially true for fit-outs involving structural changes, cabling, and mechanical upgrades.

5. Not Structuring Invoices Correctly

If your fit-out provider gives you a lump-sum invoice, it’s difficult for your accountant to classify each cost correctly. This often results in conservative deductions or missed ones altogether.

At Stemar Group, we itemise every refurbishment project by cost category. So you or your accountant can easily claim the right amounts, in the right years.

Avoiding these errors can significantly increase your return on investment and reduce tax-time stress.

Why Work with Stemar Group for Tax-Smart Office Refurbishment?

At Stemar Group, we know that a successful office refurbishment isn’t just about fresh paint or sleek design, it’s about making strategic decisions that enhance your business’s productivity and profitability.

That’s why we approach every fit-out project with a dual focus:

• Exceptional craftsmanship
• Smart tax positioning

Here’s what sets us apart:

1. We Understand ATO Rules Inside-Out

From office renovation capital works to instant asset write-off eligibility, our team is trained to scope and structure your project in line with current business renovation ATO rules.

We scope every project with your accountant in mind, ensuring all eligible costs are classified for accurate claims under ATO guidelines.

2. We Provide Itemised Invoices for Tax Claims

Our detailed quotes and invoices separate repairs, capital works, and depreciable assets, making it easy for your accountant to process deductions and avoid delays or audit risks.

3. We Partner with Tax Professionals and Quantity Surveyors

Need a depreciation schedule for a large-scale project? We can coordinate it. Want to confirm eligibility for asset write-offs before you build? We’ll guide you through it.

4. We Think Long-Term

Your renovation is an investment. By aligning your fit-out strategy with ATO compliance and deduction timelines, we help you save now and into the future.

When it’s time to refresh your office, don’t just hire a builder, partner with a team that understands how tax, compliance, and fit-out planning work together to benefit your bottom line.

Book an Office Refurbishment Consultation with Stemar Group and let’s make your next renovation smart, stylish, and strategically deductible.

FAQ - Office Refurbishment Tax Deductions

Is painting the office tax deductible in Australia?

Yes. Painting and general touch-ups are considered repairs and maintenance if they restore the space to its original condition and are fully deductible in the same financial year under ATO rules.

Can I claim furniture and fittings under my office refurbishment?

Absolutely. Office furniture, such as desks, shelving, and chairs, is classified as a depreciating asset under Division 40. You can claim them over their effective life, or use the instant asset write-off if your business is eligible and the cost is below the ATO threshold.

Is my home office renovation tax-deductible?

Yes, if the space is used exclusively for business purposes. You must calculate the percentage of business use, and only that portion of expenses (repairs, capital works, and depreciation) can be claimed. Personal-use areas are not deductible.

Can I claim office renovation costs immediately?

Only some. Repairs and maintenance can be claimed in full, immediately. Capital works must be deducted over time, while depreciating assets may be eligible for the instant asset write-off depending on your business structure and the asset’s value.