More employees are working from home than ever before as a result of COVID-19. The ATO has introduced a new ‘shortcut method’ in response to this, to simplify the process for those who are claiming work from home deductions for the first time.
The shortcut method allows employees to claim all work-related running expenses at a rate of 80 cents for each hour they work from home during COVID-19. Taxpayers are eligible to claim using the shortcut method as long as they are incurring additional deductible running expenses as a result of working from home.
Deductible running expenses you can claim through the shortcut method include:
• Utilities such as heating, cooling, and lighting.
• Cleaning costs for your work area.
• Mobile or landline phone expenses for work calls.
• Internet connection.
• Repair costs for home office equipment and furniture.
• Computer consumables and stationery.
• The decline in value of a computer, or similar device.
The new shortcut method applies to expenses incurred from 1 March 2020 to 30 June 2020. To claim the deduction, a record of hours worked such as timesheets or rosters must be kept as proof. Minimal work tasks completed at home such as occasionally checking emails or taking calls are not eligible for the deduction.
Alternatively, individuals can also choose to deduct working from home expenses using two pre-existing methods. The actual cost method is where individuals claim the actual portion of running expenses incurred for work by keeping a diary that details the work portion of your household running expenses. This must include receipts and documents supporting your claim.
The fixed-rate method is another method available to individuals, where a fixed rate of 52 cents per hour worked can be claimed. This applies to electricity and a decline in furniture value, but the actual work-related portion of expenses such as mobile and internet costs must be calculated separately.
Keep in mind that individuals can only claim work from home deductions using one of the three methods. The ATO has also made clear that if you are temporarily working from home as a result of COVID-19, expenses such as rent, mortgage, and insurance cannot be claimed.
As always if you any questions about the new work from home tax deductions or how it may affect you and your business, please feel free to reach out to one of our expert team for advice and guidance on (07) 3103 8551 or email us directly.
Susan Flux, Brisbane
Since that time I known Tony and his team at Lee and Lee, they have provided me with outstanding advice and services regarding my personal, family and especially my SMSF borrowing setup for wealth creation and tax reduction strategies that have since led to financial independence.
I now very clear and feel confident on my future financial goals and taxation strategies and know they can be achieved with Tony’s expert and professional help.
Shukri Barbara, Property Tax Specialists Sydney
Tony’s understanding of the business and tax environments, together with his experience and can do attitude enables him to deliver creative solutions outside the square as much as inside, A positive thinker I find Tony inspiring, guiding clients and associates to a prosperity mindset.
Tony has impressed me with his technical knowledge and execution. He works with honesty and integrity and is generous in his dealings.
John Mu, Internet Marketing Strategist Gold Coast
Tony Lee and his team at Lee & Lee is without a doubt Australia’s number one accounting firm.
Tony has the strategies which are helping me legally minimise tax. He has helped me in my personal development and wealth creation to build a multimillion dollar property portfolio.