“Working from home” claim now 80 cents per hour, but Beware!

The Australian Taxation Office (ATO) is announcing special arrangements this year due to COVID-19 to make it easier for people to claim deductions for working-from-home.

 When does it start?

The new arrangement will allow people from 1st March 2020

 What is the claim?

You can claim a rate of 80 cents per hour for all their running expenses.

Multiple people living in the same house can claim this new rate. For example, a couple living together could each individually claim the 80 cents per hour rate.

The requirement to have a dedicated working-from-home area has also been removed.

What records must I keep?

The new shortcut method will make it easier for those who are working-from-home for the first time. You will only be required to keep a record of the number of hours worked from home as evidence of your claim.

Can I still use the old methods?

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.

Working-from-home claims for the year to 30th June 2020.

There are 3 ways that you can choose to calculate your additional running expenses for the 12 months to 30th June 2020:

  • (from 1st March 2020 only) claim a rate of 80 cents per work hour for all additional running expenses.
  • (whole year) 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.
  • (whole year) claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

 3 golden rules for deductions.

  1. Taxpayers must have spent the money themselves and not have been reimbursed,
  2. the claim must be directly related to earning income, and
  3. there must be a record to substantiate the claim.

Example

Bianca is an employee who works as a copy writer and editor. Bianca 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. She 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.

Alternatively, Bianca can also decide to claim using existing “‘working-from-home” calculations. Under that method, Bianca can claim the desk, chair, gas and electricity under the 52 cents per hour, but would need to work out the decline in value of the laptop (depreciation), and calculate the work-related portion of the laptop, stationery, phone and internet usage.  This may calculate out to be a higher figure.

If you need any help in working out the best method to claim your Home Office costs, contact any of the team on (03) 9585 7555 or emailenquiries@mktax.com.au

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