When we assist taxpayers with the preparation and lodgement of their tax returns, we persistently hear taxpayers say that there are no tax deductions that they can claim, or that their employer pays for all their work expenses.
Well, this year as a result of COVID-19, many of us have had to work from home. To recognise working from home and the additional costs that we may have incurred, the ATO is allowing us to claim a tax deduction of 80 cents for each hour that we have worked from home since 1 March 2020.
To be eligible for this deduction it should be noted that you do not need to have a separate or dedicated area of your home set aside for work, such as a study. This 80 cents per hour, or “the shortcut method”, includes all deductible running expenses such as:
- 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
- Cleaning expenses
- Phone costs, including the decline in value of the handset
- Internet costs
- Computer consumables, such as printer ink
- The decline in value of a computer, laptop or similar device
Note, however, if you use the 80 cents per hour “short cut method”, you are not allowed to double-dip, that is, you are not able to use this method and claim a percentage of the abovementioned costs again. For example, if you claim 80 cents per hour, you cannot also claim your stationery cost or a percentage of your home internet cost, as they have been included in the 80 cents per hour.
Also, you must keep a record of the number of hours you have worked from home such as timesheets, diary notes etc.
Should you require more information about your eligible tax deductions, please submit an online enquiry now or call Peter Quinn on +61 2 9580 9166. We also offer a FREE 45-minute consultation should you have other financial planning, taxation or superannuation issues you may wish to discuss.
The information in this document does not take into account your personal objectives, financial situation or needs, and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.