This year, we have all found ourselves working from home at one stage or another due to COVID-19 and one of the most common questions when preparing an individual tax returns this year is, what can I claim for working from home in my tax return?
If you are an employee who had to work from home, you may be able to claim a deduction for expenses you incur relating to that work. These can be additional running expenses such as electricity, the decline in value of equipment or furniture and telephone and internet expenses.
Employees generally can’t claim occupancy expenses such as rent, mortgage interest, water and council rates. In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.
This year, given the large numbers of employees working from home due to COVID-19, the ATO has introduced a temporary shortcut method to calculate a deduction for home office expense from working from home. Under this method you can claim 80 cents per hour for each hour you work from home during the period 1st March 2020 to 30th September 2020.
You can use this method if you are working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking telephone calls and have incurred additional running expenses as a result of working from home.
This method covers all your work from home expenses, such as telephone & internet expenses, the decline in value of equipment & furniture, electricity and gas for heating, cooling & lighting. If you use this method, you can’t claim any other expenses for working from home (i.e. depreciation for a computer) as this is taken to be included within the hourly rate.
This shortcut method was specifically introduced to apply for the period where large numbers of employees where working from home due to COVID-19, the higher hourly rate of 80 cents per hour only applies for hours worked from home during this period. It is recommended that you maintain a record of the days and hours you have worked from home or the basis of the calculation used to determine the hours you intend to claim at the hourly rate.
If you wish to claim home office expenses prior to 1st March 2020, you will need to use the lower 52 cents per hour method which existed prior to COVID-19 for hours worked from home prior to 1st March 2020. Further details on this method can be found on the ATO website at link at the end of this article.
If you are working from home in your normal course of employment not due to COVID-19 the existing methods for claiming home office expenses still exist and can be applied to calculate you claim for home office expenses. Further information on the existing methods for claiming home office expenses can be found at the following ATO website link:
Please contact our office if you require any further assistance regarding the claiming of home office expenses in your individual income tax return.
Written by Joe Borrelli of our office