With social distancing policies in full force in Australia due to COVID -19, a lot of employees are required to work from home. Working from home has its own challenges and it definitely leads to increased costs like electricity, heating, cleaning, Mobile etc.  But thankfully, you are entitled to claim expenses incurred because of working from home.

ATO has made some major changes related to claiming home office expenses due to COVID-19 pandemic. ATO has introduced a new method (Shortcut method) for claiming Home-Office expenses to make it easier to claim home office expenses

If you run your own business, please refer to this for claiming home office expenses.

What working from home expenses can you claim?

• Heating & Cooling
• Depreciation on Laptop, desktop etc
• Cleaning
• Printing & Stationery
• Depreciation on home office furniture
• Phone & Internet expenses

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Methods to claim: Work from home expenses:

Fixed-Rate

One can use a fixed rate of 52 cents an hour for each hour that you work from home – based on either your actual use or pattern of use. This covers heating, cooling, lighting, cleaning, and the decline in value of furniture and furnishings. For telephone & internet expenses: you can calculate the business portion of your home phone and internet using an itemized account or pattern of use. You can also claim all expenses incurred for printing & stationery and Depreciation on computer equipment if bought for work purposes apportioned for private use. If work has provided you with a laptop, you cannot claim that.

Shortcut Method

One can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:

• working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
• incurring additional deductible running expenses as a result of working from home.

You do not have to have a separate or dedicated area of your home set aside for working; such as a private study.

It covers all running expenses like electricity, gas, depreciation, phone & internet costs, consumables, etc.

The shortcut method will be in place from 1st March 2020 to 30th June 2020.

Actual Expenses

Dedicated work area

Keep a diary of actual hours you work from home for the year or keep a diary for a representative four-week period to show your usual pattern of working at home. Since over the next few weeks, you might be mainly working from home due to social distancing policies in effect because of Coronavirus, keep a separate diary activity to reflect that. the work-related percentage that you come up with can be applied to all your actual expenditure over the course of the year. For telephone & internet expenses: you can calculate the business portion of your home phone and internet using an itemized account or pattern of use. You can also claim all expenses incurred for printing & stationery and Depreciation on computer equipment if bought for work purposes apportioned for private use. If work has provided you with a laptop, you cannot claim that.

For cleaning expenses, you have the apportion the total spend according to home office area to House area.

No Dedicated Area

If you don’t have a dedicated work area, your expenses for heating, cooling and electricity should be calculated by determining the actual cost of running each unit you used per hour and multiplying that by the hours you worked from home. The amount of the additional expense is generally small. This will particularly be so where there are other people using the area at the same time you are working. In those circumstances, there is no additional cost for lighting, heating or cooling.

In this case, it might make sense to just use the fixed-rate method to determine the claim for working from home office expenses

It is very important that in order to claim theses expenses, you need to keep a diary or some other substantiation records. If you haven’t started making one, please start making one now.

Book a free consultation or contact us to discuss your situation.

ThinkWiser is a boutique Accounting firm based in South Morang, Victoria. We provide Accounting, Bookkeeping, Tax compliance services to small businesses and individuals throughout Australia through video-conferencing. We provide Mobile Accounting & Tax Services to the following suburbs: Mernda, Doreen, Yarrambat, Mill Park, Bundoora, Plenty, Craigieburn, South Morang & Melbourne. For any queries, please call us on 03 9005 6762 or email us at [email protected]