April 2020 | Jonathan Harris
In view of the outbreak of COVID-19, more and more office employees are being forced or encouraged to work from home where possible. As such, office employees must not forget to claim the tax deductions hiding in their home offices.
On Tuesday, 7 April 2020, the ATO announced that taxpayers working from home could now claim 80 cents per hour for all of their running expenses (Shortcut Method), rather than calculating specific costs under the old rules. Running expenses are the costs of using equipment and utilities at home for work purposes and include:
- heating and cooling;
- the decline in value of equipment, furniture and furnishings in the area that is used for work (e.g. desk and chair);
- the cost of repairs to the equipment, furniture and furnishings referred to in paragraph 4; and
- other expenses, including computer consumables (e.g. printer, paper, ink and stationery).
According to the ATO Assistant Commissioner, Karen Foat, to make a successful claim under the Shortcut Method, a taxpayer must produce a record of the number of hours they worked from home as evidence of their claim.
The Shortcut Method is backdated to 1 March 2020, so running expenses incurred before that date cannot be claimed under the new rules.
If a taxpayer incurred running expenses before 1 March 2020, they could claim a deduction at the rate of 52c for every hour of work. Taxpayers could also claim work-related portion of their phone, internet expenses, computer consumables (e.g. printer, paper or ink), stationery and any decline in the value of their computer, laptop or other device.
Remember the three golden rules for tax deductions before making a claim:
- you must have spent the money yourself and not have been reimbursed by your employer;
- the claim must be directly related to earning an income; and
- there must be a record to substantiate the claim.
For specialist advice on the tax implications associated with working from home or for commercially savvy advice generally, please contact our directors, Jonathan Harris or Scott Freidman on (02) 9023 9131. We also have access to tax experts to help you.