COVID-19 short-cut method for claiming home office expenses
The Australian Taxation Office (‘ATO’) has announced a temporary simplified short cut method to make it easier for individual taxpayers to claim deductions for additional running expenses incurred as a result of working from home due to the Coronavirus pandemic.
To be eligible to claim a deduction for working from home, all of the following must apply:
- You must have spent the money.
- The expense must be directly related to earning your income.
- You must have a record to prove it.
- The item cannot have been provided to you by your employer
- You cannot have already been reimbursed for the expense by your employer
For the period starting 1 March 2020 until at least 30 June 2020 you can claim a rate of $0.80 per hour you work from home due to COVID-19, as long as you are:
- working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
- incurring additional deductible running expenses as a result of working from home.
The shortcut method rate covers all deductible running expenses, including:
- electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
- the decline in value and repair of capital items, such as home office furniture and furnishings (i.e. An item whose value is over $330 inc GST)
- cleaning expenses
- your phone costs, including the decline in value of the handset
- your internet costs
- home office equipment that is under the value of $330 inc GST
- the decline in value of a computer, laptop or similar device.
Requirements to claim:
You do not have to incur all of these expenses, but you must have incurred additional expenses in some of the above categories as a result of working from home due to COVID-19, to be able to claim.
If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above.
You only need to keep a record of the number of hours you have worked from home as a result of COVID-19. Examples are timesheets, diary notes or rosters.
If you do not wish to claim using the ‘Short-cut method’, the other methods of claiming home office expenses are still available. Those are:
- The Fixed Rate method, under which you could claim all of these:
- a rate of $0.52 per hour worked 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, and stationery (provided the computer consumable and stationary have a value of less than $330 inc GST)
- the work-related portion of the decline in value of a computer, laptop or similar device (this will need to be done on your ITR).
- The Actual Cost method, where you would claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
If you require further information on this, please visit the ATO’s website.