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Tax deductions to claim for working from home due to COVID-19

Peter Switzer
·3-min read
Close up of a mother going through her financials
There are many tax deductions to be claimed for working from home during the coronavirus crisis. (Image: Getty)

A Current Affair asked me to explain what someone working from home can claim as a tax deduction.

When I was talking to the cameramen, they indicated they were not aware of claimable expenses when working from home. So, I guess there are a lot of normal Australians in the same boat.

What follows is a summary of what you should know if you’re an employee locked up at home doing work.

First up, it’s important for you to know that to claim a deduction you must have spent the money, or you will be charged for, say, extra heating because you were working from home.

When it comes to the Tax Office, they want you to be able to prove it so having records of the costs is important.

Also, the expense must be directly related to earning your income – so if you want to claim your Netflix account, you better have a good list of docos that are relevant to your business. If you’re a TV critic, that Netflix bill is all business!

By the way, if your boss pays you an allowance or a rebate to cover your costs from working at home, then you can’t claim your outlay as a tax deduction unless the amount is less than the cost to you. If it’s more it becomes income that you will pay tax on!

What can you claim?

Check these out:

  • You can claim for electricity, heating, cooling, lighting, cleaning costs, phone, internet, and home office equipment.

If the cost is crucial to you doing your job from home and you have proof, then it should be claimable.

You can claim the full cost up to $300 for home office equipment, which includes computers, printers, telephones, furniture and furnishings. For bigger amounts, a depreciation deduction in your tax return is permissible.

What can’t you claim?

This info always leads to someone asking, what can’t I claim?

  • You can’t claim your mortgage, rent and rates. These are understandable but you also can’t claim coffee, tea, bickies, that you might have got for free at work! Nor toilet paper, but you could claim the paper for your printer.

How do I claim?

Ultimately through your tax return and there are three ways to claim. Here they are:

  1. The shortcut method, where you simply claim a rate of 80 cents per work hour for all additional running expenses. You keep a timesheet and so if you work 10 hours a day then you can claim $8 a day or $40 a week over how many weeks you are locked up and not at work

  2. The fixed rate method, which the ATO says “you can claim a deduction of 52 cents for each hour you work from home instead of recording all of your actual expenses for heating, cooling, lighting, cleaning and the decline in value of furniture.” This rate is based on average energy costs and the value of common furniture items used in home business areas.

  3. The actual cost method: a proportion of the actual cost. If you think your house usage has risen by 20% working from home you claim 20% of heating, phone, etc.

For more info go to the ATO webpage on home office expenses.

That’s what you need to know about claiming a tax deduction for the business-related costs you’ve endured working from home.

Expecting a $1,500 JobKeeper payment?

Not after tax.

If you were expecting $1,500 a fortnight from your boss, courtesy of the government and the ATO, there is tax to pay! It means on the $1,500 JobKeeper payment, you will take home $1,308, so you pay $192 tax.

There’s an old saying that there are only two things certain in life — death and taxes — and this story well and truly proves that.

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