Working From Home Tax Deduction
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15/04/2020
We are officially into our fourth week of working from home at KLC and boy has that flown! I sit at my kitchen table every morning and start up my laptop, make my coffee, turn the heater on and light a candle. This is then followed by connecting to the internet, opening my emails, switching my internet based work phone to “available” and of course telling Google to “please play my Spotify playlist”.
As I sat back in my chair this morning, sipping my coffee, waiting for my computer to connect to my work intranet, I thought to myself, I wonder how much of what I do on a daily basis working from home I can claim on tax? With the end of financial year slowly creeping up on us (that’s a lie, it’s certainly not creeping, it’s flying faster than the gentleman at my grocery store after I sneezed near him yesterday) it got me thinking I really need to start collating a list of expenses I’ve paid for over the last month. Thankfully the ATO have done all the hard work for me and outlined exactly what I can claim and how to go about it.
Firstly, these three things MUST apply:
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You must have spent the money
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The expense must be directly related to earning your income
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You must have a record to prove it
Sounds easy enough right? Money leaves my account for a work based item or service and I keep the receipt for it. However, if you must be working from your home fulfilling your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls – you know who you are!
Secondly, these things you CANNOT claim a deduction for:
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Items provided by your employer
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Something which your employer has already reimbursed you for
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Occupancy expenses such as mortgage interest, rent and rates
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Cost of coffee (damn it, that would be a good extra hundred) tea, milk and other general household items your employer ay otherwise have provided you with at work
So, I made a list of expenses incurred over the month and all I could come up with was a power board for all my cords to plug into, my candle (it’s essential yeah?) and a new calculator. Hmm, doesn’t seem worth it, but more digging and I found some very valuable information!
Running Expenses
So as mentioned earlier, I start up my laptop, connect to the internet, turn my heating on and occasionally put my lamp on for some extra lighting. These running expenses can all be claimed using two methods:
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The simpler short-cut deduction method which was recently announced by the government and applies from March 1 to 30 June this year, or
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Claiming a proportion of the running expenses of your home office, this is called the fixed rate method
The short-cut deduction method
The short cut method rate covers all deductable running expenses including:
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Electricity for lighting, cooling or heating and running electronic items used for work (computer) and gas heating expenses
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The decline in value and repair of capital items, such as home office furniture and furnishings cleaning expenses
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Your phone costs, including the decline in value of the handset
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Your internet costs
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Computer consumables such as printer ink
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Stationary
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The decline in value of a computer, laptop or similar device
So how does the shortcut method work? – simple: you claim a rate of 80 cents for each hour you are working from home.
So, over the past 4 weeks working from home I have already scored myself $121.60! Not too bad at all.
Fixed Rate Method
Of course if you don’t want to use the short cut method you can used the fixed rate method which is 52 cents per hour for heating, cooling, lighting, cleaning and decline in value of office furniture’s + the work related portion of your actual costs of phone and internet expenses, computer, stationary etc.
What to do at tax time
Great news is you only need to keep a record of the number of hours you have worked from home as a result of COVID-19, such as providing timesheets, diary notes or rosters. So, you don’t need to start collating any gas or electricity bills which is great! Remember to use the note “COVID-Hourly Rate” in your tax return. Make sure you are prepared when visiting your taxman, so you don’t miss out!
For more information visit the ATO website here.
written by
Olivia Buhagiar
References:
Australian Taxation Office – COVID-19 Support for individuals and employees
