As COVID-19 continues to change our lives, you may now be working from home . To make it easier when claiming a deduction for the additional running costs you have incurred as a result of working from home, the ATO has announced a few things to help.
A simplified method has been introduced that allows you to claim a fixed rate of 80 cents per hour for all your running expenses, rather than having to calculate the additional amounts specifically.
This simplified method will be available to use from 1 March 2020 until 30 June 2020. It may be extended depending on when work patterns return to normal.
Claiming a deduction
To claim a deduction for working from home, all of the following must apply:
- You must have spent the money.
- The expense must be directly related to earning your income.
- You must have a record of some kind to prove it.
This means you can’t claim a deduction for items provided by your employer, or if you have been reimbursed for the expense.
If you are not reimbursed by your employer, but instead receive an allowance from them to cover your expenses when you work from home, you:
- must include this allowance as income in your tax return
- can claim a deduction as outlined above
Expenses you can claim
- If you work from home, you will be able to claim a deduction for the additional running expenses you incur. These include:
- electricity or gas for heating, cooling and lighting the area from which you are working and running items you are using for work
- cleaning costs for your dedicated work area
- phone and internet expenses
- computer consumables e.g. printer paper, ink and stationery
- home office equipment, including computers, printers, phones, and furniture
Expenses you can’t claim
If you are working from home only due to COVID-19, you cannot claim:
- mortgage interest, rent and rates
- coffee, tea, milk and other general household items your employer may otherwise have provided you with at work.
Calculating running expenses
There are three ways you can choose to calculate your additional running expenses:
Shortcut method ─ claim a rate of 80 cents per work hour for all additional running expenses. You can claim this as long as you are actually working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls
It covers all deductible running expenses, including:
- electricity for lighting, cooling or heating and running electronic items used for work (e.g. your computer), and gas heating expenses
- the decline in value and repair of items, such as home office furniture and furnishings
- cleaning expenses
- your phone costs, including the decline in value of the handset
- your internet costs
- computer consumables, such as printer ink & paper
- the decline in value of a computer, laptop or device.
If you use the shortcut method, you only need to keep a record of the hours you worked at home, for example timesheets or diary notes. On your 2019–20 tax return, you must include the note ‘COVID-hourly rate’ in your tax return.
Fixed rate method ─ claim all of these
- a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture
- the work-related percentage of your actual costs of phone and internet expenses, computer consumables, stationery
- the work-related percentage of the decline in value of a computer, laptop or device.
- actual cost method ─ claim the actual work-related percentage of all your running expenses, which you need to calculate on a reasonable basis.