The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for each specific expense.
The Australian Taxation Office (ATO) clarified that multiple people living in the same house can claim this new rate, while the requirement to have a dedicated work-from-home area has also been removed.
The new method will apply to the period between 1 March 2020 and 30 June 2020, with the ATO due to review the special arrangement for the next financial year as the COVID-19 situation progresses.
Assistant commissioner Karen Foat said the new shortcut method 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.”
Ms Foat confirmed that if taxpayers use this shortcut method, they will need to keep a record of the hours they have worked from home as evidence of their claim.
According to the ATO, the simplified method will encompass all deductible running expenses, including electricity for heating, cooling and lighting; phone and internet expenses; and the decline in value of computers, printers, phones, furniture and furnishings.
The Tax Office stressed that claims for working-from-home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working-from-home approach and requirements.
The ATO explained that the new shortcut arrangement does not prohibit people from making a working-from-home claim under existing arrangements, where they calculate all or part of their running expenses.
This means that taxpayers will be able to choose from three ways to calculate their additional running expenses for the allocated period.
- claim a rate of 80 cents per work hour for all additional running expenses.
- claim 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.
- claim 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 that the three golden rules for deductions still apply. 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.
Bianca is an employee who works as a copywriter and editor. Bianca starts working from home on 16 March as a result of COVID-19 and replaces her face-to-face meetings with online video conferencing.
She has just bought a new laptop, desk, chair and stationery. She also wants to claim some additional gas, electricity, phone and internet costs due to working from home.
Under the shortcut method, Bianca can now claim all her expenses under a rate of 80 cents per hour. All she needs is her timesheets.
Bianca can also decide to claim using existing working-from-home calculations. Under that method, Bianca can claim the desk, chair, gas and electricity under the 52 cents per hour, but she would need to work out the decline in value of the laptop, and calculate the work-related portion of the laptop, stationery, phone and internet.