If you have been working from home during the COVID-19 pandemic, you will need to calculate your deductible work-related expenses. This could make lodging your tax return more challenging this year. Did you know that the Australian Taxation Office (ATO) have introduced a temporary shortcut method, which may help you calculate your deductible work-related expenses with minimal record keeping requirements?
This method is only available from 1 March to 30 September 2020 (extended from 30 June), which means it can be used to calculate your working from home expenses for the periods from:
- 1 March 2020 to 30 June 2020 in the 2019-20 income year, and
- 1 July 2020 to 30 September 2020 in the 2020-21 income year.
The ATO may extend this period, depending on when work patterns return to normal.
The shortcut method allows you to claim 80 cents per hour for all deductible work-related expenses incurred as a result of working from home as long as you:
- were working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls;
- incurred additional running expenses as a result of working from home.
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 to prove it.
Expenses you can claim
If you work from home, you will be able to claim a deduction for the additional expenses you incur, which 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, such as printer paper, ink and stationery;
- home office equipment, including computers, printers, phones, furniture and furnishings - you can claim either the full cost of items up to $300 or the decline in value for items over $300.
You do not have to incur all of these expenses to use the shortcut method, but you must have incurred additional running expenses in some of the above categories when working from home. While you do not need to have a dedicated work area, you must keep a record, such as a diary or timesheet, of the number of hours you have worked from home.
Expenses you cannot claim
While working from home you cannot claim:
- the cost of coffee, tea, milk and other household items your employer may have otherwise provided for you at work;
- costs relating to children and their education, including home schooling costs or buying equipment such as iPads and desks;
- items for which you’re reimbursed, paid directly by your employer or the decline in value of items provided by your employer – for example, a laptop or phone;
- time spent not working, such as your lunch break or home schooling your children.
Employees generally cannot claim occupancy expenses such as rent, mortgage interest, water and rates.
Please note that if you use the shortcut method, you cannot claim any other expenses for working from home for that period. You do not have to choose the shortcut method. You could opt for either the fixed rate (52 cents) or actual cost methods instead. You can use the method that will give you the best outcome, as long as you meet the criteria and record keeping requirements for your chosen method.
This article has been directly sourced from the ATO website, the full article is available here. Please visit the ATO’s website ato.gov.au for further information. Should you require specific tax advice for your personal circumstances, please refer to a registered tax professional.