working from home tax deductions

Record your hours worked: WFH deductions simplified for COVID-19

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Staff working from home will be able claim 80 cents per work hour for all their running work expenses, in a new arrangement made by the Australian Taxation Office because of COVID-19. 

The Australian Taxation Office (ATO) has made the special arrangement for working from home deductions this year due to the COVID-19 isolation restrictions.

The arrangement aims to make it easier to claim deductions for working from home for those that haven’t claimed the working from home deductions before.

Usually, it is necessary to calculate costs for specific running expenses to claim the tax deduction. 

Under the new arrangement: 

  • The requirement to have a dedicated work from home area has also been removed.
  • Multiple people living in the same house can claim the new rate. For example, a couple living together could each individually claim the 80 cents per hour rate. 
  • Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.

The ATO’s three golden rules for deductions still apply: 

  • Taxpayers must have spent the money themselves and not have been reimbursed; 
  • The claim must be directly related to earning income; and,
  • There must be a record to substantiate the claim.

Record your hours worked 

Assistant Commissioner Karen Foat said the new shortcut method will make it easier for those who are working from home for the first time.

“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” Ms Foat said.

“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.

“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim.”

The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses.

Expenses you can and can’t claim 

The running expenses that you can claim include:

  • electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work;
  • cleaning costs for a dedicated work area;
  • phone and internet expenses;
  • computer consumables (for example, printer paper and ink) and stationery; and,
  • home office equipment, including computers, printers, phones, furniture, and furnishings.

The running expenses that you can’t claim if you are working from home due to COVID-19 are:

  • occupancy expenses such as mortgage interest, rent and rates; and,
  • the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work.

Other options for claiming work from home deductions 

This new shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.

There are three ways that you can choose to calculate your additional running expenses for the 1 March–30 June period:

  • claim a rate of 80 cents per work hour for all additional running expenses.
  • claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device
  • claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

The ATO has provided the below example of Bianca, an employee who works as a copywriter and editor. 

Bianca starts working from home on 16 March as a result of COVID-19 and replaces her face-to-face meetings with online video conferencing. 

Bianca has just bought a new laptop, desk, chair and stationery. She also wants to claim some additional gas, electricity, phone and internet costs due to working from home.

Under the shortcut method, Bianca can now claim all her expenses under a rate of 80 cents per hour. All she needs is her timesheets.

Bianca can also decide to claim using existing working from home calculations. Under that method, Bianca can claim the desk, chair, gas and electricity under the 52 cents per hour, but would need to work out the decline in value of the laptop, and calculate the work-related portion of the laptop, stationery, phone and internet.

The ATO has created a hub for all COVID-19 super and tax changes due to the Government’s COVID-19 stimulus packages.

More information about working from home is available at the ATO’s website

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