Expenses that can be claimed
If you work from home, you will be able to claim a deduction for additional running expenses incurred, which may include:
- electricity expenses associated with heating, cooling and lighting the area from which you are working, and running assets used for work (such as a computer and printer)
- associated cleaning costs for a dedicated work area
- phone and internet expenses
- computer consumables (for example, printer paper and ink) and stationery
- home office equipment, including computers, printers, phones, furniture and furnishings. Of these, you can claim either the:
- full cost of items up to $300
- a decline in value for items over $300.
The ATO has stated that it accepts that tracking all of these expenses can be challenging for ordinary taxpayers, so has undertaken to accept a temporary simplified method (or “shortcut” method) of calculating additional running expenses for the period starting 1 March 2020 to 30 June 2020 in your 2019-20 tax return & 1 July 2020 to 30 June 2021 in your 2020-21 tax return. More details are below.
Expenses not within the COVID-19 scope
If you are only working from home because of the COVID-19 situation, you generally:
- cannot claim the cost of coffee, tea, milk and other general household items an employer may otherwise have provided while you were at the usual work place
- cannot claim occupancy expenses such as mortgage interest, rent and rates.
Calculating running expenses
There are at present three ways you can choose to calculate additional running expenses:
- fixed rate method ─ claiming all of these:
- 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 of a computer, laptop or similar device.
- actual cost method ─ claiming the actual work-related portion of all running expenses, which you need to calculate on a reasonable basis.
- the new shortcut method (details below).
Under the short cut method, you can claim a deduction of 80 cents for each hour as long as you are:
- working from home to fulfil 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.
Note that in this case, you do not have to have a separate or dedicated area of your home set aside for working, such as a private study.
The shortcut method rate is intended to cover deductible running expenses, including:
- electricity for lighting, cooling or heating and running electronic items used for work (for example a computer), and gas heating expenses
- the decline in value and repair of capital items, such as home office furnishings
- cleaning expenses
- phone costs (which includes decline in value of the handset)
- internet costs
- computer consumables, such as printer ink
- the decline in value of a computer, laptop or similar device.
It should be pointed out that you do not have to incur all of these expenses, but you are likely to have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.
Importantly, if you opt to use the shortcut method to claim a deduction for additional running expenses, you cannot claim a further deduction for any of the expenses listed above.
For this shortcut method, the ATO will require some form of record of the number of hours you have worked from home as a result of COVID-19. Examples are timesheets, diary notes or rosters. If using the other methods, a record of the number of hours worked from home is also required along with records of expenses.
Need more information tailored to your circumstance? Feel free to contact us on 03 7022 6838 or send us a message.