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ATO explains exactly how to claim your remote work hours

Jessica Yun
·4-min read
If you worked from home during the Covid-19 lockdown, this is the tax shortcut you need to know about. (Source: Getty)
If you worked from home during the Covid-19 lockdown, this is the tax shortcut you need to know about. (Source: Getty)

If you’ve been working from home during the coronavirus pandemic, you’ll already know that the ATO has created a new ‘shortcut’ method to allow taxpayers to claim 80 cents per hour for work-from-home running expenses.

Because of the pandemic, the ATO has introduced this shortcut method – which is separate to the 52 cents fixed-rate method – and has also gotten rid of the condition that you need to have a designated work-from-home area.

But if you’re not sure how to actually make this claim when you lodge your tax return for the last financial year, Yahoo Finance asked the ATO exactly what you need to do.

1. Keep track of your hours

While this method cuts out a lot of the paperwork from the whole process, you’ll still need to keep a record of the hours you’ve racked up from your makeshift home office.

“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” said ATO assistant commissioner Karen Foat.

“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.

“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim.”

Any hours you log must be between the period of 1 March 2020 to 30 June 2020.

The ATO spokesperson said keeping a log can be as simple as having your own personal spreadsheet where you record the number of hours you worked every day.

So all you do is multiply $0.80 with the number of hours you worked from home, and that’s the sum you’ll be able to claim in your tax return. For a lot of Australians who began working from home in mid-March, this sum will be upwards of $350.

2. Claim it when you lodge

But where do you actually make note of the hours worked when filing your tax return?

If you’re filing your taxes yourself, you’ll want to record your hours worked under the category ‘Other work-related deductions’.

These deductions are reserved for expenses you incur because you’re spending money as part of your job.

If you have a tax agent, provide your log of hours worked and let them guide the process.

There are three golden rules that any work-from-home claims have to follow:

  1. You have to have spent the money yourself and not be reimbursed;

  2. The claim must be directly related to earning income; and

  3. There has to be some record of the purchase, such as a receipt.

The other way to claim work-from-home expenses

The ATO’s ‘shortcut’ method makes it easier for you to claim your running remote work expenses – but there’s also another method, called the ‘diary method’, you can opt for.

This is the paperwork-intensive way, and involves consistently keeping track of expenses such as home office equipment, lighting, heating, cooling bills, phone and internet expenses, and stationery.

“Of the two methods this usually produces the larger deduction but the record-keeping requirements are more stringent,” said H&R Block tax communications expert Mark Chapman.

“The diary needs to detail the time you spend in the home office compared with other users of the home office. Keep your diary record for a representative four-week period.

“The ‘work-use proportion’ you come up with over that four-week period can then be applied to all your actual expenditure over the course of the year,” he said.

But if you’ve been working from home more because of Covid-19, you’ll have to keep a separate diary for this period, Chapman warned. “Don’t try to apply this larger work-related proportion to the whole year!”

What to know about filing your tax return

The ATO has warned Australians not to file too early; your income information likely won’t be ready until the end of July, anyway.

Yahoo Finance has also put together a list of other things you can claim in your tax return, including surprising things you may not have expected (some Aussies will be able to claim face masks, sex toys and garden gnomes).

There are some common tax return mistakes you should avoid making, too, and ensure you’re aware of the six things the ATO is scrutinising this year.

Want everything all in one place? Here’s everything you need to know about tax time 2020.

Still have questions about claiming your work-from-home expenses? Let us know at jessica.yun@yahoofinance.com.

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