We want your tax to be easy to understand, so we have put together the an easy to read/understand core information related to work related expenses especially during the time when you’ve had to work from home which is probably most of us thanks for COVID.
The ATO has made tax time a little simpler for this financial year by adding temporary shortcuts which allow us to calculate the working from home expenses two ways.
One of these methods is commonly known as the $0.80 per hour method. As with many things the ATO streamlines there is a catch. It’s very important to note if you do choose to use this method, it is an all-inclusive type method. So that means you can’t claim any other working from home expenses, including depreciation of office furniture or any equipment. You don’t need a dedicated work area to use this method, however you do need to keep record of the number of hours worked from home. And this can be in the form of a time sheet, a roster, or a diary.
The next method is the fixed rate method, which is $0.52 per work hour. So instead of calculating your actual expenses for heating, cooling, lighting, cleaning, and the depreciation of home office furniture, you will need to separately calculate the phone and internet usage, computer consumables, stationery, and other computer depreciation expenses, allotting for private use. If you use the fixed rate method you will need to have a dedicated work area and a diary for a four-week period that represents your pattern of home office use over the income year.
Last of all methods is the actual cost method, which is as it sounds the actual work-related portion of all of the costs incurred consequently working from home. Regardless of the method that you choose to use to calculate your working from home expenses, it’s so important to keep all those records!
As with any dos there are not to dos and the most common not to dos when it comes to claiming working from home expenses is claiming expenses you are not entitled to claim. The top three mistakes often made when claiming working from home expenses are personal expenses such as coffee, tea and toilet paper. While they might normally be supplied by an employer, they still aren’t directly related to earning income. Expenses related to children’s education is another one, such as online learning courses or laptops. They’re not claimable either.
In the previous financial year there was an increase in claims for personal protective equipment. Things like hand sanitizer, masks, particularly for those in front-line roles. There was also a decrease in claims such as travel and car expenses of course, which was to be expected given the impacts of COVID with people in lockdown or working from home. As always, what you can claim really does depend on their circumstances. While we always ask questions to attain as much information regarding your line of work as we all have different working environments and are able to claim varied expenses it is important to keep in mind any changes that may occur in your line of work as we know as much as you tell us.
It is also important to note if your job requires you to be in close proximity with customers or clients during COVID you may be able to claim a deduction for items like gloves, face masks, sanitizer, antibacterial spray, things like that. This includes industries like health care, retail, and hospitality. These items will have had to be purchased for use at work and pay for it using your money and not being reimbursed for that, which is actually THE rule when claiming any work-related expense. You also need a record to support the claim, a receipt is always best for that.
Still got questions, feeling confused or simply unsure of your personal position, feel free to get in touch with us. We can be reached here.