As businesses managed the risks associated with COVID-19 many clients found themselves working from home for the first time. Below we outline the tax deductions available, the records you need to keep and how your tax claim is calculated.
Office equipment, stationery and consumables
You are entitled to claim the work-related usage of computers, printers, electronic devices, toner, ink, pens, paper and the like. Keep a diary over four weeks to demonstrate the percentage that is work-related. Items costing more then $300 will need to be depreciated.
Telephone and internet
If you are required to use your home internet or personal mobile for work you can claim the work-related usage of your monthly bills. Review a monthly bill to determine the work-use percentage on either data used, number of calls or time spent performing work duties.
Home office running expenses
These costs include the heating, cooling, lighting, electricity consumed and cleaning when using a dedicated work area like a study. There are two ways to claim these costs.
- Claim the actual expenses incurred. Keep your electricity and gas bills covering the period you were working from home. You can only claim the percentage of these bills that relate to your dedicated work area. Measure the square meterage of your home office as a percentage of the total square meterage of the whole house. Claim that percentage of your bills.
- Claim a set rate per hour working from home. A set rate of 52 cents per hour covers the cost of electricity, gas, cleaning and depreciation of office furniture. You will need to keep a diary to document the number of hours spent working in the dedicated work area or study.
A new simplified method of claiming everything above – the shortcut method
With many taxpayers working from home for the first time the ATO has introduced the shortcut method. This is a flat rate of 80 cents claimed per hour worked from home. Unlike the 52 cent per hour rate mentioned above there is no requirement to have a dedicated work area like a home office. You can be working from your couch or dining table!
However, the 80 cent rate does not just cover your running expenses like heating, cooling and office furniture. The shortcut method covers all deductible expenses including;
- Electricity and gas for heating, lighting and cooling.
- Office furniture.
- Office equipment like computers, tablets, phones, printers etc.
- Cleaning costs.
- Mobile phone and landline.
- Printing, inks, stationery and consumables.
This new method covers all costs and there is no need to keep receipts. You will need to demonstrate the number of hours worked with evidence such as a timesheet, roster, diary or payslip.
When we come to complete your Tax Return please let our team know if you were required to work from home so we may ensure you get the maximum claim.