Millions of Aussies are starting to realise that while working from home can be a boon for flexibility, it can also be a hit to private expenses.
According to the Australian Tax Office (ATO), 6.7 million taxpayers claimed $7.9 billion in ‘other work-related expenses’ last year, including working from home expenses.
However, assistant ATO commissioner, Kath Anderson warned that many taxpayers are in the dark about what they can and can’t claim.
“There is a rising trend of employees working from home, and while extra costs related to working from home are usually deductible, we are seeing some taxpayers either over-claiming or claiming private costs,” she said.
“In particular, we are seeing some taxpayers claiming expenses they never paid for, expenses their employer reimbursed, private expenses and expenses with no supporting records.”
Okay, so what can I claim?
Workers can claim additional costs incurred as they work from home – provided the costs weren’t reimbursed by their employer, were related to the job and were documented.
Mobile phone and internet bills
While you can claim these, Anderson warned, “One of the biggest issues we are seeing is people claiming the entire amount of expenses like their internet or mobile phone, not just the extra bit related to work.
“In reality, the rest of us are subsidising their private phone calls and internet usage, which is not okay.”
Running heating, cooling and lighting are deductible – but taxpayers need to ensure they can prove these were additional costs.
“If working from home means sitting in front of the TV or at the kitchen bench doing some emails, it’s unlikely that you are incurring any additional expenses,” she said.
“However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space.”
Stationary, printing and computer depreciation
These are all eligible deductions – provided taxpayers are only claiming the work-related portion, and not private expenses.
What about rent?
“Employees cannot generally claim occupancy-related expenses like rent, mortgage repayments, property insurance, land taxes and rates,” Anderson said. She drew attention to the case of an advertising manager who claimed a deduction for her rent and electricity costs.
Both claims were disallowed because the taxpayer’s home didn’t have the character of a ‘place of business’, like a hairdresser’s home salon or a caterer’s home kitchen.
You have to be able to prove it
“Taxpayers claiming working from home expenses should remember that we might contact their employer to confirm their claim. Sometimes we discover that the employer paid the costs, either upfront or through reimbursement, while other times we discover there was no need for the employee to work from home at all,” Anderson said.
She added that the ATO is set to disallow a lot of claims due to poor record-keeping.
“Taxpayers must keep supporting records such as receipts, diary entries and itemised phone bills or other records. Even though detailed receipts are not required for phone and internet claims up to $50 per year, it’s not an automatic entitlement – you still need to be able to show how you calculated your claim,” she said.