With the ever-increasing impact of the Corona Virus plaguing our way of life, more and more people will be asked to work from home where that is practical.
With a greater number working from home it is an opportune time to understand what the Australian Taxation Office (ATO) will allow you to claim as a tax deduction for home office expenses relating to that work.
Generally, the ATO have outlined 3 ways that you can claim for expenses working from home:
- Home is your principal place of work and you have a dedicated work area,
- Home is not your principal place of work, but you have a dedicated work area, and,
- You work at home, but you don’t have a dedicated work area.
The ATO note that the third area above will not generally entitle you to much of a claim for running expenses however where employees are forced to work from home in circumstances such as Covid 19, a more lenient attitude will be exercised.
If you work from home, you can claim the work-related proportion of your running costs.
- Home office equipment including computers, printers, telephones and furniture. You can claim either of – the full cost up to $300 per item or decline in value for items over $300.
- Heating, cooling & lighting. Claims for running costs can be made on either an actual expenses method. – this takes into account the number of hours you work from home for the year or keeping a diary for a representative four-week period to show the pattern of usage and applying the cost per unit of power used.
Alternatively, you can apply a fixed rate of 52 cents per hour for each hour you work from home.
- The cost of repairs to your home office equipment
- Telephone & Internet based on usage. The ATO will allow a claim of $50 without analyzing bills and usage or alternatively for telephone they will allow 25 cents per landline call, 75 cents per mobile calls and 10 cents per text messages. Internet claims will be a proportion based on an estimate of usage using a 4-week representative period
- Cleaning costs
- Other running expenses including computer consumables and stationery.
On the 7th April, the ATO announced a new temporary simplified method to make it easier to claim deductions for working from home. Under this simplified method, you can claim a deduction of 80 cents per hour for each hour you work from home due to COVID-19 as long as you are;
- Working from home to fulfill your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
- Incurring additional running expenses as a result of working from home.
You do not need to have a separate or dedicated area of your house set aside for working and the shortcut method rate covers all deductible running expenses, including,
- Power for lighting, cooling or heating & running electronic devices
- Decline in value & repair of capital items
- Cleaning expenses
- Telephone costs
- Internet expenses
- Computer consumables
You must keep a record of the number of hours you have worked from home as a result of COVID-19 and if you use this method to claim a deduction, the tax return must include a note COVID hourly rate. This shortcut method provides for claims for the period 1st March 2020 to 30th June 2020 although this may be extended.
If you require further clarification or you are in any doubt about any of the above information, please do not hesitate to contact The Garis Group on 02 4969 4699 or email firstname.lastname@example.org