As the COVID-19 pandemic forces many non-essential workers to work from home, the Australian Tax Office has announced new working from home expense rules.
The ATO has rolled out a new working from home shortcut for anyone who has been working at home since March 1, because of measures to slow the spread of the coronavirus.
Listen: What four Australian healthcare workers want you to know about COVID-19.
Here’s what you need to know before tax time rolls around.
What is the 80 cents per hour shortcut?
Instead of having to calculate costs for specific running expenses, such as the proportion of internet time used for work or entertainment, employees can claim a flat 80 cents per hour worked at home.
The special new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, instead of calculating costs for specific running expenses as taxpayers would under normal circumstances.
People can still use the old method of calculating proportion of use and depreciation if they prefer.
The new arrangement is only in place between March 1 and June 30, but the tax office will keep an eye on the coronavirus situation and decide if it should continue into the next financial year.
Who can claim the 80 cents per hour shortcut?
You can claim a deduction of 80 cents for each hour you work from home due to COVID-19, as long as you are working from home to fulfil your employment duties.
This means if you are only carrying out minimal tasks such as occasionally checking emails or taking calls, you are not eligible.
You must be incurring additional deductible running expenses as a result of working from home.
You do not need to have a dedicated area of your home set aside for working, such as a desk or private study.
What can I claim the 80 cents per hour shortcut on?
To claim a deduction for working from home, all of the following ‘golden rules’ 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 flat 80 cents per hour shortcut can be applied to the additional running expenses you incur while working from home.
- Electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
- Cleaning costs for a dedicated work area
- Phone and internet expenses
- Computer consumables (for example, printer paper and ink)
- The decline in value and repair of capital items, such as home office furniture and furnishings
- The decline in value of a computer, laptop or similar device
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 above expenses.
What can I not claim?
You cannot claim items like coffee, tea and toilet paper which used to be supplied by employers to employees in the office.
You also cannot claim items like children’s education expenses, or your rent or mortgage.