How to take a tax shortcut if you are working from home
12 May 2020
5
min read
Working from home due to COVID-19 health restrictions means you may be able to simplify home office expense claims this tax time.
If you’ve been working from home during the coronavirus health emergency, you may have noticed extra expenses you’ve had to pay.
Perhaps you've rushed out to buy a new desk, stationery or even a new computer. Then you may have had expenses to operate your home office with bills like power, phone and internet costs.
The Australian Tax Office has made special arrangements to make it easier to claim deductions this tax time for those extra costs you may have incurred by working from home.¹
If you have spent the money, if the expense is directly related to earning your income, and if you’ve got a record, such as a diary note or timesheet, to prove it, then you may be able to use the ATO’s new simplified method to claim a rate of 80 cents per hour for your work-from-home expenses.
How to claim COVID-19 deductions
- The shortcut method means you can claim a rate of 80 cents per work hour for all additional running expenses.
- The fixed-rate method means claiming:
- 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.
- The actual cost method means claiming the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
What you can claim at tax time
If you have been working from home, your claim may mean a deduction for the additional running expenses you incur.
These may 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.
What you can't claim at tax time
If you have been 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, toilet paper and other general household items your employer may otherwise have provided you with at work.
If you use the shortcut method to claim a deduction, you cannot claim a further deduction for any of the individual expenses covered by the claim.
What does the shortcut method actually cover?
The short-cut method will be available to use from 1 March 2020 until 30 June 2020 after which it will be reassessed by the ATO.
The ATO says you do not have to incur all of the expenses listed below, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.
The shortcut method rate covers all deductible running expenses, including:
- 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.