The Coach: Working from home tips for tax

The ATO announced special arrangements due to COVID-19 to make it easier for people to claim deductions for working from home.

What am I eligible to claim on my tax return
as a result of working from home due to COVID-19?

With many individuals having to work from home as a result of COVID-19, there may be a range of costs associated with creating a home office and working from home that you could be entitled to claim.

Generally speaking, you can claim the full value of small items such as stationery up to $300 as a tax deduction or depreciate the value of higher valued assets over a certain amount of time. This can include items such as desks, chairs, computers and general office equipment. You can also claim back the cost of keeping your workspace clean, repair costs and consumables such as paper and printer ink.

Employees working from home are not entitled to the instant asset write off where eligible businesses can immediately claim a tax deduction of up to $150,000 for the business portion of the cost of work-related assets in the first year they are used.

Obviously if you have been reimbursed for work-related expenses by your employer, you cannot also claim these personally.

For example, if your employer buys you a laptop, you cannot claim depreciation on this item. Nor can you claim expenses related to supervising your children’s education and online learning from home.

It is a good idea to log your home working hours and any costs you have incurred in a diary. Always retain copies of your expenses and receipts. You can claim utilities costs such as energy and phone for the work-related portion of your household expenses.

The ATO announced special arrangements due to COVID-19 to make it easier for people to claim deductions for working from home. The new arrangement will allow people to claim a rate of 80c per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.

You will however be required to keep a record of the number of hours worked from home.

Can you explain the types of methods I can use to calculate my deductions for working from home during COVID-19?

According to the ATO website there are three methods available. The shortcut method is the simplest method for calculating deductions for working from home. Under this method, you can claim 80c per hour for each hour you work from home during the period March 1 to June 30.

This method works for you if you are working from home to fulfil your employment duties.

It is important to note that this shortcut method also covers your phone, internet utilities and depreciation. If you use this method, you can’t ‘double dip’ by claiming any other expenses for working from home.

The fixed rate method lets you claim a deduction of 52c for each hour you work from home for the additional work-related expenses you incur. This method covers all expenses you incur for utilities and the cost of repairs to home office equipment and depreciation.

To claim using this method, you must keep records of either your actual hours spent working at home for the year or a diary for a representative four-week period to show your usual working patterns.

 The actual cost method allows you to claim the additional running costs you directly incur as a result of working from home, including; stationary, utilities, internet and phone expenses, depreciation and cleaning but only if you use a dedicated area for work.

Speak with your tax adviser to ensure you understand your entitlement and are following ATO requirements.

Andrew Heaven is an AMP financial planner at WealthPartners Financial Solutions