Australian workers are beginning to return to the office, but many still are working at least part-time from home, and this presents some tricky tax questions.
The Australian Taxation Office (ATO) has reminded taxpayers that there are three ways to claim work from home expenses, including a shortcut method.
“Even with people shifting back to the office, we know many Australians have opted to continue working from home at least one day a week,” assistant commissioner Tim Loh said.
“The shortcut method is straight forward; just multiply the hours worked at home by 80 cents.”
Under this method, you’ll need a record of the number of hours you worked from home. This could be a timesheet.
It can also be claimed by multiple taxpayers living in the same home. It also doesn’t require taxpayers measure out a dedicated work area.
However, the ATO added, if you’re claiming the shortcut, you can’t claim for other expenses like new office furniture, a laptop or phone and internet costs.
Other ways taxpayers can claim work from home expenses
There are two other ways taxpayers can claim work from home expenses.
They can claim a rate of 52 cents per work hour for the heating, cooling, cleaning and lighting of a dedicated work area, and the decline in value of things like furniture. Then, taxpayers can work out telephone and internet expenses, stationery and decline in value of items like computers.
The third option is for taxpayers to claim the actual work-related portion of all running expenses for the dedicated work space. This is considered the most labour intensive approach, however can net a larger claim.
“If you decide to go with an existing method, I would encourage you to do your research and keep good records”, Loh said.
“Keeping track of each individual expense and calculating the work-related use of each one can be fiddly so be organised. So, make sure you’ve read the guidance on our website or chat to your registered tax agent.”
What can’t I claim at tax time?
While things like coffee, tea and toilet paper may be ordinarily supplied by your employer, that doesn’t mean you can claim them on tax.
That’s because they’re not directly related to earning an income.
In the same way, taxpayers generally can’t claim their rent, mortgage, council rates or strata fees on tax.
“Working from home does not mean your home is a place of business for tax purposes. If you claim occupancy expenses, you may have to pay capital gains tax when you sell your home, even if it is your main residence,” the ATO said.
Taxpayers also can’t claim expenses related to a child’s education, like laptops or online courses.
Large expenses like a computer that costs more than $300 can be claimed on tax, but not immediately. These sorts of large expenses should be claimed over a few years.
Taxpayers will be able to begin filing claims from 1 July 2021.