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Tax Deductions, COVID-19, Job Keeper, Job Seeker, Tax

What can I claim when working from home during COVID-19?

Working from home due to COVID? You will certainly have incurred expenses but what can you claim a deduction for?

Well first lets rule out some expenses you can’t claim:-

Coffee, tea, milk and other general household items your employer may otherwise have provided you with at work aren’t deductible while working from home.

Incurred some costs in getting children and their education including setting them up for online learning, teaching them at home or buying equipment such as iPads and desks? Well you can’t claim those.

Has your employer reimbursed you for phone/internet/laptop/headset? If you have been reimbursed by your employer you can’t claim.

Working from home due to COVID? You will certainly have incurred expenses but what can you claim a deduction for?

The ATO has outlined 3 methods for claiming for those expenses as a deductions:-

  1. The first of these method is the 80 cent shortcut method. Using this method you can claim 80 cents for every hour spent working from home. This rate is inclusive of costs for phone, internet depreciation of equipment and office furniture and electricity and gas, which means you can’t claim separately for these expenses. Please note as of writing this method is only applicable from the 1st of March to the 30th of September. You should keep a timesheet, roster or diary that supports your claim.
  1. The second method is the fixed-rate method. This method is a rate of 52 cents per hour for every hour you spent working from home. This rate is inclusive of depreciation of office furniture (I.e. desk), electricity and gas and repairs of home office equipment and furniture. A dairy of showing a usual pattern of working from home for four weeks should be kept to support your claim.

Which means you can claim separately for phone, internet, computer consumables, stationery and decline in value of office equipment (ie. Laptops). For these expenses you can only claim the percentage of use that relates to work. For example phone and internet a month bill should be used as method of apportionment (ie. Work calls vs private calls)

  1. The final method to be used and by far the most complex is the actual expenses method. Under this method you can claim the costs directly related to working from home these can include:-
  • Electricity and Gas for cooling, heating and lighting of the home office.
  • Depreciation of home office furniture (ie desk and chairs)
  • Depreciation of home office equipment (ie. Laptops, phone and printers)
  • Phone expenses
  • Internet expenses
  • Cleaning (if you have a dedicated Home Office Area)
  •  Computer consumables and stationery (ie. Ink)

Now the kicker! What do you need to claim this method? Well bare with me because the list is longā€¦.

Keep a record of the number of hours worked at home during the income year.

Keep a diary of a four week period representative of a usual work pattern.

For working our the value of the depreciation on those office assets you will need to keep the receipts of those assets and show the percentage of the year you used those assets exclusively for work.

Work out the cost of your cleaning expenses of your home office I.e. apportion by using the floor area of the home office vs the whole house. The claim should be further reduced by private use of your home office and use of the office by other family members.

Working out the cost of your heating, cooling and lighting. You must work out the cost per unit of power used, the average units of power used per hour (this kilowatt per hour for each appliance, equipment or light used) and the total hours used for work related purposes.

To work out the cost of your phone and the internet you will need to work this out based on an itemised bill and determine your usage over a four week period.

For computer consumables and stationery you just need to keep your receipts.

You must take into account other members of your household when working out your expenses.

Where to from here…

Once your head has stopped spinning hopefully that provides a bit more clarity on what deductions you can claim when working from home. If unsure always consult a registered tax agent to help sort out your tax affairs. Don’t have one? Well we at the Financial Foreman do a pretty good job šŸ‘

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