A lot of people have been working from home due to Covid-19. Some for the 1st time and some have significantly increased the amount of time they have worked from home.
If you have been working from home, you may have expenses you can claim as a tax deduction in your 2020 Income Tax Return.
The Australian Taxation Office have introduced a temporary short cut method to calculate these expenses with minimal record-keeping requirements.
This method is temporary and only available for the period 1 March to 30 June 2020. All employees working from home in this period can use this method.
Using this method, you can claim 80 cents per hour for each hour you work from home during the period 1 March to 30 June 2020.
You can choose to use this rate if you:
- are working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls.
- have incurred additional running expenses as a result of working from home.
The shortcut method covers all of your work from home expenses, such as:
- phone expenses
- internet expenses
- the decline in value (depreciation) of equipment and furniture
- electricity and gas for heating, cooling and lighting.
If you use this method, you can’t claim any other expenses for working from home.
You don’t need to have a dedicated work area to use this method. However, you must keep a record of the number of hours you have worked from home. This could be a timesheet, roster, a diary or documents that set out the hours you worked from home.
You don’t have to use the shortcut method, you can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome as long as you meet the working criteria and record keeping requirements for each method.
If you had a work from home arrangement before 1 March 2020, you will need to use one of the existing methods to calculate your deduction for the period 1 July 2019 to 29 February 2020.
The shortcut method includes decline (depreciation) in value of all items. If you choose to use this method there is no requirement to separately calculate the decline in value of equipment or depreciating assets. However, as you may combine methods or use a different method in later years it’s important to keep the:
- purchase receipts for depreciating assets or equipment you use when working from home
- records of how you calculated your work-related use of the asset
- your decline in value calculations.
The ATO may extend the period of the claim past 30 June 2020 depending on when work patterns return to normal.
Please contact us if you have any queries re your working from home claim.
Director / CEO