With employees being encouraged to work from home to keep safe and slow the spread of COVID-19 the Australian Taxation Office has issued guidelines as to what extra expenses you can claim when it comes to tax time. Its important that you are aware of these measures now so that you can maintain the necessary records. These new guidelines apply from 1st March to 30th June, 2020 and will be reviewed after that date moving forward.
EXPENSES YOU CAN CLAIM
If you work from home, you will be able to claim a deduction for the additional running expenses you incur. These include:
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.
EXPENSES YOU CAN"T CLAIM
If you are working from home only due to COVID-19, you:
cannot claim occupancy expenses such as mortgage interest, rent and rates
cannot claim the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work
CALCULATING YOUR RUNNING EXPENSES
There are essentially 3 methods available for calculating your home office expense claim;
shortcut method ─ On Tuesday, the Australian Taxation Office (ATO) announced a new method that allows you to claim 80 cents per hour for all your running expenses, rather than needing to calculate costs for specific running expenses
fixed rate method ─ claim the actual work related portion of all of these additional costs for phone, internet expenses, computer consumables, stationery, and the work-related depreciation of computer/laptop; and a rate of 52 cents per work hour to cover heating, cooling, lighting, cleaning and the depreciation of office furniture,
actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
The shortcut was introduced to simplify the tracking of all the expenses during challenging times. The choice you need to make is whether you want to opt for simplicity and less record keeping, or whether you are prepared to keep records which could possibly result is a bigger tax deduction claim.
The 80 cents per hour "shortcut" method is much simpler and generous, as it would just require time-sheets to support the hours that you are working from home. Whereas if you incurred substantial costs to set up your home office it maybe more beneficial to claim the actual costs incurred. In this case you still need to keep the time-sheets but you also need to work out how much of your costs was work related. The benefit is getting a larger claim, but the record keeping and calculations may deter you.
To work out which is the beneficial option for you, contact one of the DISAVIA CONSULTING team members to help you navigate the right path.
Comments