ATO tax return: Tax Office reveals new working from home expenses rules

The tax office has announced special arrangements this year – and it affects everyone working from home due to the coronavirus crisis.

The Australian Taxation Office has made a major change this year as a result of the ongoing COVID-19 pandemic.

With countless Australians now working form home in a bid to slow the spread of the virus, the ATO is rolling out a new working from home shortcut to make it easier for people to claim deductions.

The special new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, instead of calculating costs for specific running expenses as taxpayers would under normal circumstances.

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Multiple people living in the same house can claim this new rate individually, and it is no longer a requirement to have a dedicated work from home area in order to claim.

Assistant Commissioner Karen Foat said the new shortcut method – which will be in place from March 1 to June 30 – will make it easier for those who are working from home for the first time.

“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” Ms Foat said.

“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.

“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim.”

The shortcut is being rolled out to help Aussies who may be working from home for the first time as a result of COVID-19.

This new shortcut arrangement does not stop people from making a working from home claim under the existing arrangements, which involves calculating all or part of your running expenses.

Claims for working from home expenses prior to March 1 can’t be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.

The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses.

Taxpayers will be able to choose one of three ways to calculate their additional running expenses for the period.

They include claiming a rate of 80 cents per work hour for all additional running expenses, claiming 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, or claiming the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

The ATO is also reminding people the three “golden rules” for deductions still apply.

That means taxpayers must have spent the money themselves and not have been reimbursed, the claim must be directly related to earning income, and there must be a record to substantiate the claim.

Last month, the ATO revealed hundreds of thousands of Australians were set to receive a stern warning as the body takes on cryptocurrency traders.

The ATO is in the process of contacting up to 350,000 individuals either by letter or email to “remind them” of their taxation obligations when they trade in cryptocurrency, such as bitcoin.

Cryptocurrencies are considered to be a form of property and therefore an asset for capital gains tax purposes.

That means any financial gains made from the buying and selling of cryptocurrencies will generally be subject to capital gains tax and must be reported to the ATO.