How to claim tax deductions when working from home

By April 17, 2020 News

The ATO has devised a new method for work-related tax deductions in light of more people working from home due to coronavirus.

The new method will allow people to claim 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.  The new change is in effect from March 1 to June 30 and may be extended by the ATO should the COVID-19 situation progress significantly. In essence the ATO is reminding people that the three golden rules for deductions still apply.

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

Here’s how the changes would work for those within the fleet management sector, or for those working from home generally:

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 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
  • home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the
    • full cost of items up to $300
    • decline in value for items over $300.

Expenses you can’t claim

If you are working from home only due to COVID-19, you can’t claim:

  • occupancy expenses such as mortgage interest, rent and rates
  • the cost of 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
  • 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 portion of your actual costs of phone and internet expenses, computer consumables, stationery
    • the work-related portion of the decline in value of a computer, laptop or similar device.
  • actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

 

For more information on how to calculate and claim a deduction for working at home during COVID-19 from the ATO website, click here