This year has seen Australians working from home in numbers never seen before, thanks to the COVID-19 pandemic. As a result, there are many questions about what employees can claim for the additional costs that they’re incurring from working from home.
That’s where the Australian Tax Office has come to help, with the new working from home tax shortcut method, which means you can claim $0.80 per hour. This will simplify and make it a whole lot easier for employees to be able to work out a tax deduction, ready for their 2020 tax return.
This simplified method will be available to use from 1 March 2020 until 30 June 2020. You may still use one of the existing methods to calculate your running expenses if you would prefer to.
Currently, the most common way that Australians claim working from home expenses, is the typical 52 cents per hour of the time spent working at home plus they might claim a proportion of other costs, such as equipment depreciation, internet and phone costs.
However there’s no need to worry about keeping track of depreciation, and other costs with the new working from home tax shortcut method. It’s very simple, all up very easy calculation of a claim done at 80 cents per hour of working at home.
The concept of this simplified shortcut method, is that it covers all of the usual working from home costs into one neat number, without you needing to equate each line item costs.
These expenses covered in this shortcut method include;
- electricity for computers, printers, lighting, cooling or heating, etc;
- gas heating expenses;
- repair and depreciation of items such as home office furniture;
- your phone costs, including depreciation of phone hardware;
- NBN and internet costs;
- computer consumables, such as printer ink and stationery;
- cleaning expenses, and;
- depreciation of computer, laptop or similar device.
The conditions are fairly basic working from home needs to have been as a result of COVID-19 which pretty well most people are in that circumstances and this calculation can be calculated from the 1 March to 30 June 2020 only.
The ideal method for you to do that would be to keep a diary, and record all the hours that you have been or are, working at home each week. So if you use time management software, or time sheets, even some business management software, you could possibly just export and use that time data or time sheets as a way to substantiate the time spent working from home.
Then all you need to do, is simply calculate that at 80 cents per hour, for the claim. The ATO does have a few conditions on this, however. Obviously, you need to be actually working from home, and incurring additional costs, and as mentioned earlier, as a result of COVID-19.
The time period in which you can claim using this simple method is strictly between 1 March and 30 June, so if you were working from home prior to 1 March, then you would have to submit your claim for at least that part of the financial year, using the old working from home claim method.
I would also suggest that if you went out and spent significant money in order to work from home, such as new equipment, computer, printer, etc than you may want to speak to your accountant about claiming the true costs of depreciation, etc as they are likely to work out more than the eighty cents per hour.
Working from home tax shortcut method
It is also worth highlighting that if you do use this simplified shortcut method to claim your working from home deduction and you lodge your 2019–20 tax return through either a tax agent or by using myGov, you must include the note ‘COVID-hourly rate’ on your tax return. There will be further instruction about this, closer to 30 June.
You can find out more about the working from home tax shortcut method, over on the ATO Working from Home page.