Claiming ‘working from home’ expenses

As we follow physical distancing measures, dining tables around Australia have become makeshift work spaces. Those who are not accustomed to working from home may not know that there are beneficial tax implications.

You are able to claim an income tax deduction on various expenses associated with earning your income as an employee or otherwise.

Tracking these expenses can be challenging so the Australian Taxation Office (ATO) has introduced a short cut method for calculating expenses from 1 March 2020 until at least 30 June 2020 that can then be claimed in your income tax return.

You can claim 80 cents per hour to cover all running expenses and multiple individuals in the same home can claim this rate per hour. You are required to keep a record of the number of hours worked from home, for example a timesheet or your diary.

The new shortcut method the ATO have introduced does not require you to have a separate designated work space and covers the claim for a broader range of expenses including the depreciation on your computer and other consumables including internet and the like.

For some it will be beneficial to claim under the old method and claim 52c per hour which covers only heating, cooling, lighting, cleaning and the decline in value of office furniture and then claiming other expenses separately such as the depreciation on your computer and internet expenses.

Expenses you can claim

• 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 that are work related
• 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

• 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.

The existing ATO rules for claiming deductions still apply

• The taxpayer must have spent the money themselves and cannot have been reimbursed
• The claim must be directly related to earning income
• There must be a record to support the claim.

If you have any questions in relation to the ATO’s short cut measures announced please do not hesitate to get in touch with PKF.