💡 Key insights
- Australians working from home due to COVID-19 could claim tax deductions for additional running costs such as electricity, internet, phone usage, furniture and equipment that were incurred because of working from home.
- The Australian Taxation Office provided a special shortcut method for COVID-19 work from home claims so taxpayers could claim a set rate per hour worked at home instead of calculating individual expenses, making it easier to claim without detailed receipts.
- Under the COVID-19 tax rules you needed to keep a record of the hours you worked from home and the costs you incurred in order to substantiate your claim at tax time.
- You could not claim general household costs such as rent, mortgage repayments, or everyday personal items, and you still needed evidence such as receipts, bills or time records to support the deductions related to work-from-home expenses.
Many Australians have in recent weeks transitioned into working from home. Although employees may be saving on transport and eating-out costs, increases in internet usage and other utilities will mean an increase in household bills. However, the Australian Tax Office (ATO) has announced that some costs for working from home will be tax deductible. Here’s what you’ll be able to claim when it’s tax time.
What you can claim
Home office equipment
Setting up a home office can be expensive, especially if you haven’t had to work from home previously. Costs for furniture (such as a desk or office chair), computers, printers or phones can be claimed. You can claim up to $300 in these costs. If your items are worth more than $300, you can claim their decline in value.
Internet and phone usage
Not many modern offices run without using the internet. Having a stable and fast internet connection is particularly important when working from home. It’s not surprising then that your internet bill may be higher than it has previously been. You can claim this, along with your phone bill (where you used your phone for work).
Electricity
You can claim electricity usage where it’s used to work from home. This includes lighting your work area, connecting your computer or laptop to power and heating or cooling your home office area.
Computer consumables
If you use office accessories such ink, paper or stationary to work from home you can claim these costs on your tax return. Make sure you keep the receipts for everything you purchase in relation to doing your job from home. Further, you should maintain entries or time sheets which record the hours that you work from home.
The shortcut method
Calculating all the costs you can claim for working from home can seem arduous. To make the process simpler, the ATO has introduced a ‘shortcut’ method for all Australians working from home due to COVID-19. You can claim 80 cents for every hour you work from home and you don’t need to have a home office in order to claim it. For example, if you work 8 hours a day, 5 days per week you can claim $6.40 per day, or $32 per week. If you work from home for 12 weeks, you’ll be able to claim $384 on your tax for working from home. However, if your costs for equipment and running costs exceed this, it may be worth getting your receipts in order to claim these separately. You’ll also still need to provide evidence of your hours worked from home.
What can’t I claim?
You can’t claim the ordinary costs for residing in your property. This includes costs such as rent and mortgage repayments. You also can’t claim the costs for extras providing by your office such as coffee, tea or snacks. Deductions for other things remain the same, however, it may be wise to contact a tax professional to make sure you’re making the most of your tax return.
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