Author
Simon Barry
Category
Alerts

Many of us have now become accustomed to working from home as a result of the COVID-19 crisis. As this will generally come with some additional costs, we summarise the options available for claiming home office expenses during this time.

Shortcut (Alternative) Method

This is a recently announced simplified approach that allows a claim of a flat 80 cents for every hour worked from home between 1 March 2020 and 30 June 2020.

The ATO will review the appropriateness of this method beyond 30 June 2020, depending on when work patterns start returning to normal.

The criteria for the worker are:

  • employment duties being fulfilled and not just the carrying out of minimal tasks such as occasionally checking emails or taking calls; and
  • additional deductible running expenses being incurred as a result of working from home.

The shortcut method rate is designed to cover all deductible running expenses, including:

  • electricity for lighting, cooling or heating and running electronic items used for work, and gas heating expenses;
  • the decline in value and repair of capital items, such as home office furniture and furnishings;
  • cleaning expenses;
  • phone costs, including the decline in value of the handset;
  • internet costs;
  • computer consumables, such as printer ink;
  • stationery; and
  • the decline in value of a computer, laptop or similar device.

The only records required to be kept are timesheets or diary notes of the number of hours worked from home.

Multiple people living in the same house can claim this new rate individually and a dedicated work-from-home area is not required.

Actual Cost and Fixed Rate (Existing) Methods

All claims for additional running expenses incurred due to working from home prior to 1 March 2020 must be calculated using one of the existing methods.

From 1 March 2020, many workers may find it advantageous to continue using one of the existing methods, despite the additional calculations and record-keeping requirements.

Actual Cost

The actual work-related portion of all running expenses, calculated on a reasonable basis and substantiated through receipts and diaries.

Fixed Rate

  • 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 actual costs of phone and internet expenses, computer consumables, stationery; and
  • the work-related portion of the:
    • decline in value if over $300; or
    • full cost if up to $300,

of a computer, laptop or similar device and other equipment.

To claim using this method, records to be kept for the hourly rate must show either:

  • actual hours spent working at home for the year; or
  • a diary for a representative four-week period to demonstrate the usual pattern of working at home, applied across the remainder of the year. A change in work pattern will require the creation of a new record.

All other expenses are subject to separate calculations and substantiation.

In its media release, the ATO reminds taxpayers claiming deductions for working from home that they must have spent the money and not been reimbursed, the claim must be directly related to earning income and there must be records to prove them.

 

For more information contact your Pilot Advisor or Simon Barry at [email protected] or via phone (07) 3023 1300.