This article describes the range of expenses that employees can claim while working from home. The information provided is designed to help you track working-from-home expenses in preparation for your 2019/20 tax return.
As a simplified alternative, the ATO is allowing a flat-rate short cut claim. This method effectively bundles claimable items into a single notional amount of 80 cents per hour worked from home.
To claim a deduction for working from home, all of the following must apply:
- You must have spent the money.
- The expense must be directly related to earning your income.
- You must have a record to prove it.
Expenses you can claim
If you work from home, you will be able to claim a deduction for the additional running expenses you incur. These include:
- Electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
- Cleaning costs for a dedicated work area
- Phone and internet expenses
- Computer consumables (for example, printer paper and ink) and stationery
- Home office equipment, including computers, printers, phones, furniture and furnishings - you can claim either:
- the full cost of items up to $300
- the decline in value for items over $300.
Expenses you cannot claim
If you are working from home only due to COVID-19, you:
- Cannot claim occupancy expenses such as mortgage interest, rent and rates
- Cannot claim the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work.
You cannot claim a deduction for items supplied by your employer or expenses that have been reimbursed by your employer.
Calculating expenses
There are three ways you can choose to calculate your additional running expenses:
- Shortcut method ─ claim a rate of 80 cents per work hour for all additional running expenses
- Fixed-rate method ─ claim all of these:
- A rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture,
- The work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery, and
- The work-related portion of the decline in value of a computer, laptop or similar device.
- Actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
For more information on working from home tax deductions see this page at the ATO website or contact us at WLM Financial.
For more information on WLM's accounting services click here.