9 April 2020
by David Prichard and Nathan Rossini
- Related topics
- Personal Tax
The Australian Taxation Office (‘ATO’) have announced a temporary simplified short cut methodology to claim home office expenses specifically for the period 1 March 2020 to (at least) 30 June 2020. Given recent announcements this approach may extend into the 2021 year.
Taxpayers who are working from home due to COVID-19 are able to make an ‘all in’ claim of 80 cents per work hour for the costs of all deductible running expenses, which encompasses:
- 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;
- your phone costs, including the decline in value of the handset;
- your internet costs;
- computer consumables, such as printer ink;
- stationery; and
- the decline in value of a computer, laptop or similar device.
You do not have to incur all of the above expenses in order to make a claim using the simplified method, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19. You do not have to have a separate or dedicated area of your home set aside for working, such as a private study. You must be working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls.
Multiple people living in the same house could claim under this method e.g., a couple living together could each individually claim running expenses they have incurred while genuinely working from home, based on the 80 cents per hour method. This works out to $6 per day on a 7.5 hour working day.
This is an alternative method to claiming home running expenses under existing arrangements, which generally require an analysis of specific running expenses incurred and more onerous record-keeping. It is not in addition to these existing methods. Taxpayers cannot claim twice for the same expenditure under different methods.
You must keep a record of the number of hours you have worked from home as a result of COVID-19 (for this specific period). Examples are timesheets, diary notes or rosters and when claiming identify the claim as “COVID-hourly rate”.
Working from home running expenses that are incurred before 1 March 2020 (and under the current announcement after 30 June 2020) must be claimed using existing claim arrangements.
If you have any questions, please don’t hesitate to contact your ESV Engagement Partner on 9283 1666.