Millions of Australians who have been forced to work from home will be able to get more back in their tax returns this year thanks to new rules around expense claims.
With the coronavirus pandemic seeing Aussies shift to remote work, the Australian Taxation Office (ATO) has announced it will allow people to claim a rate of 80 cents per hour for all work-from-home running expenses.
Typically, taxpayers wanting to claim work-from-home expenses could claim it in one of two ways: through a fixed rate of 52 cents per hour, or to calculate each actual expense.
Often called the ‘diary method’, this would mean keeping track of expenses such as home office equipment, lighting, heating, cooling, as well as phone and internet expenses.
Read about the old methods: Working from home amid the coronavirus – what are the tax implications?
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The new rules slash the paperwork and record-keeping on much of this.
It also means that multiple people within one household can claim the new rate, so if you live as a couple or in a share-house with multiple people working from home, each person will be able to claim the 80 cents per hour rate.
You also don’t need to have a dedicated work-from-home area to be able to make the claim.
According to ATO Assistant Commissioner Karen Foat, the tax ‘shortcut’ means you’ll need to keep track of fewer expenses.
“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,” she said.
“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.”
So, come tax time, all you need to do when doing your tax return is multiply $0.80 with the number of hours you worked from home, and file that under the category ‘Other work-related expenses’. Then you’ll get that amount back in your tax refund – it’s as easy as that.
Claims for work-from-home expenses using this shortcut method can only be made between 1 March 2020 until 30 June this year. Any claims for remote work expenses before this date will have to be made the old way.
This special arrangement will be reviewed by the ATO for the next financial year according to how the coronavirus pandemic progresses.
Here’s how to calculate your work-from-home claims
According to the ATO, there are now three ways you can calculate your work-from-home expenses:
claim a rate of 80 cents per work hour for all additional running expenses (the new special arrangement); or
claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device; or
claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
However, you’ll need to make a separate claim for the following:
phone and internet expenses
computer consumables and stationery
decline in value on your computers or other equipment.
All work-from-home claims will still have to follow these three ‘golden’ rules:
Taxpayers have to spend the money themselves and not be reimbursed;
The claim has to be directly related to earning income; and
There has to be a record of the item or purchase to substantiate the claim.
Here’s an example of how it works
The ATO has provided an example of what the new rules might look like.
“Bianca is an employee who works as a copywriter and editor. Bianca starts working from home on 16 March as a result of COVID-19 and replaces her face-to-face meetings with online video conferencing.
“Bianca has just bought a new laptop, desk, chair and stationery. She also wants to claim some additional gas, electricity, phone and internet costs due to working from home.
“Under the shortcut method, Bianca can now claim all her expenses under a rate of 80 cents per hour. All she needs is her timesheets.
“Bianca can also decide to claim using existing working from home calculations. Under that method, Bianca can claim the desk, chair, gas and electricity under the 52 cents per hour, but would need to work out the decline in value of the laptop, and calculate the work-related portion of the laptop, stationery, phone and internet.”
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