Tax windfalls coming for home office workers but experts warn there are pitfalls to avoid now
Australians will be able to get tax back on a new laptop, printer or tablet when working from home. But these are the mistakes workers need to avoid.
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Australian workers who have spent the past week setting up their home offices could be in for a financial windfall later this year thanks to tax allowances for home-office gear and other expenses.
But there are traps, exacting rules, and precautions you need take right now to protect your refund and to avoid being caught out in July.
Even the Australian Taxation Office says it is working quickly to “simplify” its advice for an expected influx of claims.
Thousands of employees across Australia have been asked to work from home during the coronavirus pandemic, with a new Gartner HR Study showing 88 per cent of all organisations have encouraged or required their workers to work remotely whether ill or not.
And setting up new home offices for the first time has seen a rush on everything from additional monitors to desks, and wireless earbuds to quieter keyboards.
Officeworks acting managing director Michael Howard said overwhelming demand had led to sellouts in some stores and the company was working with suppliers “to source additional product to meet our customers’ needs”.
Canon Australia consumer imaging and services director Jason McLean said printers, long overlooked in the workplace, were enjoying fresh popularity at home.
“We’ve seen a significant spike in the last couple of days for productivity essentials including home printers which, like toilet paper, is an item we take for granted until we face the prospect of losing access to it,” he said.
“We’ve come to rely on other sources of printing such as the office, school or university environment for study notes, lengthy reports and business documents so making sure we’re covered at home is important.”
But Westcourt Family Business Accountants director Ross Forrester said claiming home office expenses was not as simple as raiding stores for new gear, or writing off your rent or mortgage expenses.
Employees working from home could make a claim for the electricity they used to light and cool their home office, he said, but they should keep a diary for four weeks to show how many hours they worked from home.
That diary should also include a record of small office expenses up to $200, an estimate of broadband use, and phone calls if they are not reimbursed by employers.
Mr Forrester said it could be hard to estimate how much internet data was used for work purposes but remote workers should strive to make “reasonable” assessments, excluding streaming entertainment services.
“The ATO will increasingly apply the ‘reasonable’ test because life is complicated,” he said. “These claims will become a lot more common and a lot of home-office costs will be supported.”
When it comes to home-office equipment, Mr Forrester said work-related purchases under $300 could be claimed in full on the next tax refund, but buys over that amount would need to be depreciated over time and some may need to hire an accountant to establish their entitlements.
“The government won’t want lots of mums and dads and sole traders suddenly paying accountants so they will try to simplify things,” he said.
“When the ATO can see people have made a genuine effort to do the right thing, they will collaborate.
“Money might be higher for a lot of people so tax refunds are going to become even more important.”
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A spokesman for the Australian Taxation Office said the organisation recognised “many people may be working from home for the first time” to limit the spread of COVID-19, and it planned to refine its guidance for these workers.
“We recognise that the rules can be complex for people and are actively working on how we may be able to simplify our guidance to make it easier at tax time when you are preparing your return,” he said.
Originally published as Tax windfalls coming for home office workers but experts warn there are pitfalls to avoid now