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Working from Home Tax Deduction

Working from Home Tax Deduction

The Australian Taxation Office (ATO) has announced that taxpayers can claim a deduction of 80 cents for each hour you work from home due to COVID-19.

Requirements

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.

You can claim a deduction of 80 cents for each hour you work from home (Shortcut Method) due to COVID-19 as long as you are:
• working from home to fulfill your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls;
• incurring additional deductible running expenses as a result of working from home.

You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.

You cannot 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 in this fact sheet.

Running expenses covered under the Shortcut Method

Running expenses covered under the shortcut method includes:
• electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
• the decline in value and repair of capital 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
• stationery
• the decline in value of a computer, laptop or similar device.

You do not have to incur all of these expenses, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.

Other Methods

There are two other ways you can choose to calculate your 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, and
– 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.

Expenses you cannot claim

If you are working from home only due to COVID-19, you:
• cannot claim occupancy expenses such as mortgage interest, rent and rates;
• cannot claim the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work.

Records you must keep

Shortcut Method
You only need to keep a record of the hours you worked at home, for example timesheets or diary notes.

If you lodge your 2019-20 tax return through myGov or a tax agent, you must include the note ‘COVID-hourly rate’ in your tax return.

Other Methods
If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses.

Please ensure you contact our office to discuss your particular circumstances.

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