Much like the whole team at By The Numbers, many of you will find yourself working from home or remotely due to COVID-19. This means that a spike in home office expenses claimed in tax returns for the 2019-20 year and lodged with the Australian Taxation Office will occur.
You will need to keep an accurate record on your expenses through this period, in order to claim these as deductions on income earned for the year when lodging your tax return.
How do you calculate how much to claim?
Well, there are two methods to do so.
The first method and often the easiest way is to calculate your expenses as ‘rate per hour’. The Australian Taxation Office will permit a flat rate of $0.52 per hour to cover your office at home service fees such as lighting, heating, cooling and the value of any office furniture.
So the number of hours spent in your home office, multiplied by $0.52.
You will need to keep a record of your internet, computer consumables, depreciation of computers or equipment and stationery expenses incurred; such as receipts of accounts paid and a corresponding bill issued.
Your second method is to maintain a diary of expenses, which will contain your running costs. This should be kept on record if needed to produce to the Australian Taxation Office in future.
This method can generally yield a larger deduction, however, it is a more elaborate and involved record-keeping process.