Working From Home During COVID-19
Most importantly, you generally have to be working from a seperate space dedicated in the home before you can claim. A home office or room converted to be your office is fine. Working from your lounge or dining table isn’t. There’s a BIG exception this year so read on no matter where you worked from in the property…
Also, and like any tax deduction, there’s three basic things to remember when working out if you can claim an expense – you needed to have spent the money (so it doesn’t count if work paid you back), the expense directly related to you earning work income and you have some record to prove it (like a receipt or invoice).
The year has changed many people’s work routines – your employer may have asked you to work from home. While some are used to this it’s a first for many. Knowing what you can claim is really important to giving you the best tax outcome.
There’s a few ways to claim a deduction when you work from home – this year there’s a new option available for part of the year too. We’ll go through each…
1. Actual Expenses
You can claim the work-related portion of the following expenses:
- 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) 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 for items over $300.
There’s a word of caution for this option – claiming this way can potentially put your home up for tax when you go to sell. So think carefully before using this method.
2. Cents Per Hour
This has been around a long time is a popular option as it doesn’t have tax implications for your home. Instead of claiming actual running expenses of the property you claim at a set rate of 52 cents per hour for the time you work from home. You need to keep a 4 week diary of your work activities to work out the amount of hours per week we can claim.
In addition, you can still claim expenses like internet and phone costs, computer consumables and stationary.
3. Shortcut Method
This was introduced for 1 March to 30 June 2020 and is similar to the cents per hour method. You can claim 80 cents per hour you worked from home. The big benefit here is you don’t need a home office. Working from the lounge in your PJ’s is just fine. Also, you can use your work roster or timesheets to show how many hours you worked, so no need to keep a diary.
The biggest difference here is the hourly rate covers all your expenses – you can’t claim extras like phone and internet if you claim under this method.
For those who only had to work from home due to Covid-19 it may be the best option for you.
Great question! There’s not a one size fit’s all answer. It’s good for you to have an idea what’s available before we catch up so we can go through the options and decide on the best outcome. Bring all of your info in and we can work what’s best for you.
As always. We’re here to help. Contact our office to schedule a tax appointment.