To simplify the process of claiming home office expenses amid the COVID-19 pandemic, the ATO introduced a shortcut method under which taxpayers can chose to claim a fixed rate of $0.80 per hour for all their running expenses for the 2020–21 financial year.
But an accounting firm has now cautioned that to utilise the shortcut method, both business owners and employees working from home need to keep a diligent log.
“Although Australia has fared well throughout COVID, our working patterns have changed in step with the rest of the world, as expected. It is important that Australians are aware of their entitlements under the ‘new normal’,” said David Tomasi, chairman of Moore Australia.
Mr Tomasi explained that record-keeping means taxpayers must maintain a logbook of the actual hours worked from home or a diary for a representative four-week period. This amount of use can then be applied over the entire year to determine the full claim.
If applicable, he advised keeping a separate record of the unusual actual hours worked from home, for example, due to the COVID-19 situation.
Noting that the shortcut method is not compulsory, meaning that individuals can still claim based on actual expenses incurred, Mr Tomasi reminded that they would then have to comply with the necessary, and more complex, record-keeping requirements.
According to the ATO, taxpayers are 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 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 running expenses, which taxpayers 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.
Expenses you can claim
Taxpayers can claim a deduction for the additional expenses they incur. These include:
- electricity expenses associated with heating, cooling and lighting the area from which they are working and running items they are using for work.
- cleaning costs for a dedicated work area.
- phone and internet expenses.
- computer consumables (for example, printer paper and ink) and stationery.
- home office equipment, including computers, printers, phones, furniture and furnishings; you can claim either the
- full cost of items up to $300
- decline in value (depreciation) for items over $300.
For more information on working from home, visit Home office expenses.