Now it is easier to claim your tax deductions for working from home.
As many people are working from home for the first time due to COVID-19, the ATO have introduced a shortcut which allows you to claim 80 cents per hour for working from home running expenses. These expenses include electricity expenses associated with heating, cooling and lighting, cleaning costs for work area, water, phone and internet, computer consumables and stationary. Under the previous rate, taxpayers would be required to calculate percentages of their running costs. This new shortcut recognises that many taxpayers are working from home for the first time and makes claiming a deduction easier.
Does this deduction shortcut apply to anyone working from home due to COVID-19?
This rate will apply to employees who work from home during 1st March-30 June 2020 period. After this, the ATO will review the method for the next financial year as the COVID-19 situation progresses. Claims for working from home expenses prior to 1st March 2020 must use the previous rate.
The ATO let us know that there are three ways you can choose to calculate your additional running expenses:
- shortcut method ─ claim a rate of 80 cents per work hour for all additional running expenses
- fixed rate method ─ claim 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 your actual costs of phone and internet expenses, computer consumables, stationery
- the work-related portion of the decline in value of a computer, laptop or similar device.
- actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
What does that look like for you? See below for our handy comparison of the shortcut method and the fixed rate method.
What evidence do I need to substantiate a claim?
The new shortcut only requires you to keep a record or diary of the hours you worked from home, unlike the regular rate of 52c per hour where you were required to submit specific receipts for running costs. This new method makes it easier for you to claim your tax deductions.
1. Taxpayers must have spent the money themselves and not have been reimbursed
2. The claim must be directly related to earning income
3. There must be a record to substantiate the claim
We are happy to answer any questions you may have about your tax deductions. Please call the YOUtax Team on 07 5301 9217.