Recently we published an update on deductions to claim in your next tax return regarding home office expenses.

The government has announced today some changes to how you can claim your home office expenses. Make sure you read our first article on this topic. Now let’s get into the updates and new outlines.

Expenses you can claim

As stated previously, when working from home as your primary place of business due to being affected by COVID-19, you may be able to claim running expenses, occupancy expenses and phone and internet expenses.

In most scenarios, if you are an employee working from home and you do not have a dedicated work area you will not be eligible to claim running expenses or they may be minimal. Expenses that are additional running expenses as a result of working from home may be claimed.

Newly Announced Shortcut Method

Employees can claim a deduction of $0.80 for every hour you work from home as a result of the COVID-19 workplace restrictions.

To be eligible to claim this tax deduction claim, you must be working to your full employment capacity from home. This means checking your email or taking a few phone calls does not make an employee eligible for these deductions.

You also have to be incurring additional expenses that are deductible due to working from home in your home office as a result of COVID – 19.

Another recent amendment to these deductions is that you now are not required to have a dedicated area in your home for your home office needs, such as a study or spare room.

The shortcut method rate ($0.80 per hour of work) applies to all deductible running expenses.

This includes the following running costs:

  • Electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
  • The decline in value and repair of capital items, such as home office furniture and furnishings
  • Cleaning expenses
  • Your phone costs, including the decline in value of the handset
  • Your internet costs
  • Computer consumables, such as printer ink
  • Stationery
  • The decline in value of a computer, laptop or similar device

In order to be eligible for the shortcut method when claiming deductions, you have to have incurred additional expenses, however, not all the above expenses need to be incurred.

Another important note is that if you use the shortcut method to claim a deduction for additional costs incurred due to working from home, you cannot claim any more deductions towards the expenses in the above list.

Make sure you keep a record of hours worked from your home office due to COVID-19, such as payslips or timesheets.

When lodging your 2019-20 tax return be aware that you must include the ‘COVID-hourly rate’ in your tax return if using myGov or lodging through a tax agent.

So make sure you discuss this with us when lodging your next tax return with By The Numbers Accounting!

For more information on your home office deductions, make sure you consult the Australian Taxation Office’s ‘Employees working from home’ guidelines in the following link below.

ATO 'Employees working from home’ Guide

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Contact us today to discuss your business or personal accounting requirements.