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COVID-19 Working from Home, Tax Deduction

Start With The End In Mind

UPDATE 7th APRIL 2020

TEMPORARY NEW WORKING from HOME TAX DEDUCTION

The Australian Taxation Office (ATO) has announced temporary arrangements for this FY2020 financial year due to COVID-19 to make it easier for people to claim deductions for working from home.

The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses, for the period starting 1st March 2020 through to 30 June 2020.

Multiple people living in the same house can claim this new rate. The requirement to have a dedicated work from home area has also been removed.

Choosing to use this shortcut method, will require you to keep a record of the hours you worked from home as evidence of your claim. We suggest you record this in you Outlook, manual diary or daily timesheet and then prepare a summary for year-end tax records.

This new shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.

Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method. The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses.

 ATO Provided Example

Bianca is an employee and starts working from home on 16 March as a result of COVID-19 and replaces her face-to-face meetings with online video conferencing.

Bianca has just bought a new laptop, desk, chair and stationery and also wants to claim some additional gas, electricity, phone and internet costs due to working from home.

Under the shortcut method, Bianca can now claim all her expenses under a rate of 80 cents per hour. All she needs is her timesheets.

Working from home claims for 1 March to 30 June:

There are three ways that you can choose to calculate your additional running expenses for the 1 March – 30 June period:

  1. claim a rate of 80 cents per work hour for all additional running expenses.

 

  1. claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device

 

  1. claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

Taxpayers must have incurred the costs themselves and not have been reimbursed by their employer.

While home office costs are usually not a significant tax deduction this temporary change is to simplify what is normally a complex calculation. As many people are now working from home its only reasonable that you should be claiming every possible tax deduction available in trying circumstances.

If unsure about home office claims be sure to call us for any information

All the best from MYACCOUNTANTS