Despite Australia faring much better than the majority of the world during the covid-19 pandemic, the working patterns of employees has changed in step with the rest of the world.

Over the past 12 months millions of Australians have been forced to work from home. It is therefore crucial for taxpayers to keep a diligent record of hours worked from home this financial year as tax time looms.

It is important for Australians to be aware of their entitlements when it comes to getting the most out of the tax deductions that are available to them in a world where working from home has become exceedingly popular. 

One of the key entitlements Australian should be aware of is the Australian Tax Office’s 80 cents per hour shortcut deduction method which earlier this year was extended until the 30th June 2021.

Under this arrangement, taxpayers are allowed to claim a rate of 80 cents per hour for all their running expenses, as opposed to having to calculate costs for specific running expenses. The original requirement of having a dedicated work-from-home area is also removed. Under this scheme multiple people in a household are allowed to claim the 80 cents per hour rate.

Tax agents or self-lodgers must include the “Covid-hourly rate” in their annual tax returns if they choose to nominate to use this method. If choosing to use this shortcut method, all an individual has to do is keep a record of the hours they have worked from home as evidence when making a claim.

To be eligible to claim a deduction whilst working from home the ATO outlines that; “you must have spent the money, the expenses must be directly related to earning your income and you must have a record to prove it”.

Electricity expenses associated with heating, cooling and lighting the area of which you are working from within your home can be claimed under the scheme. Cleaning costs can also be claimed, as well as expenses for internet usage and phone calls. Newly bought home office equipment that is purchased for $300 or less can also be claimed. Office equipment consisting of new computers, phones, printers, furniture and furnishings. Computer consumables such as; ink, stationary and printer paper can also be claimed.

When you are working from home there are a number of expenses that cannot claimed. These expenses include; the cost of tea, coffee, milk and other household items which your employer might provide you with at work. Australians who are working from home are also unable to claim costs that relate to their children and their child’s education such as; setting them up for online learning, teaching them at home and buying equipment such as; an iPad to assist with teaching your child. You are also unable to claim items such as a laptop or phone that was given to you by your employer. Employees also can’t claim occupancy expenses such as; water expenses or mortgage interest rates.

The Australian Tax Office last extended its simplified working-from-home deduction method in January while New South Wales was reckoning with the containment of a fresh covid-19 outbreak which sent Sydney’s northern beaches into lockdown. 

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800. 

Post Author: Craig Dangar

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