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What expenses can you claim when working from home?

Small business tax adviser
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Many offices have moved to remote working and employees are working from home, this can create added expenses for employees. However, there are possible tax deductions you may be entitled to.

 

What items can be claimed?

Home office running expenses:

Running expenses include equipment and utilities at home required for work.

  • Lighting
  • Heating or cooling
  • Cleaning
  • A decline in the value of office furniture or computer you use for work or repairs
  • Other expenses such as printer ink, paper or stationery

You can only claim a work-related proportion of these costs.

Phone and internet

If you use your phone or internet for work you can claim a deduction for the work-related percentage of your expenses. You will need to keep records from bills or any diary entries to show you worked from home.

Occupancy expenses

There are also occupancy expenses too, however as an employee generally you cannot claim these. These expenses are for those using their home as a place of business, speak to your accountant for more information.

How to calculate expenses

Running expenses:

There are now three ways you can calculate running expenses, you can claim a fixed rate of 52 cents per hour, 80c per hour for the period 1 March 2020-30 June 2020, or you can calculate your actual expenses.

  • Fixed-rate of 52 cents per hour

You can use a fixed rate of 52 cents per hour for every hour worked from home instead of record all your expenses. You will need to keep a record of hours worked from home during the year and usually need a four-week period to represent your usual working from home pattern to work out claiming for the year. You will need to work this out separately for each expense e.g. phone and internet, computer consumables, a decline in the value of your computer.

As an example, if you work 6 hours at home a week for 48 weeks a year then this would be 52 cents x 6 hours x 48 weeks = $149.76

 

  • Shortcut method –  80 cents per hour (1 March 2020-30 June 2020)

For the period of 1 March 2020-30 June 2020 you can claim 80 cents per hour for each hour worked. This includes all running expenses including phone and internet too.

  • Actual expenses

This is where your accountant can help you if you have kept all your receipts.

You can calculate actual expenses if you have a dedicated work area like an office, to do this you need to:

  • Record the actual hours you worked for the financial year
  • Work out the cost of cleaning by adding up receipts for the year and work out based on the floor area of your workspace
  • Work out the costs of your heating or cooling by – cost per unit of power, average units used per hour, total hours used for work
  • To work out the deduction on your computer or furniture which costs more than $300 you can use this tool from the ATO – ato.gov.au/depreciationtool

If you do not have a dedicated work area you need to work out the costs based on if other people are using the same area as you.

Phone and internet:

There are three ways you can calculate your phone and internet expenses, you can claim up to $50 with limited documentation, use the shortcut method for 1 March 2020-30 June 2020 or you can calculate your actual expenses.

  • Claiming up to $50

If you are not claiming a deduction of more than $50 in total you can claim the following:

  • $0.25 for work calls from a landline
  • $0.75 for work calls from mobile
  • $0.10 for text messages from mobile
  • Shortcut method –  80 cents per hour (1 March 2020-30 June 2020)

As above for running costs, for the period of 1 March 2020-30 June 2020 you can claim 80 cents per hour for each hour worked. This includes all running expenses including phone and internet.

  • Actual expenses

If you have an itemised phone or internet bill you need to determine the percentage of work use over four weeks and apply it to the year. To help work out the percentage you could use:

  • Number of work calls made as a percentage
  • Amount of time spent on work calls as a percentage
  • Amount of data downloaded or work as a percentage

For more information see ato.gov.au/phoneandinternet

 

What records do you need to keep?

You must keep records such as:

  • A diary as a representation of a four week period to show your usual pattern of working from home
  • Receipts or written evidence of depreciated assets
  • Records of small expenses
  • Itemised phone accounts

If you use a four-week representative period to calculate your expenses over the income year and your pattern of work changes, for example during COVID-19 you are asked to work from home remotely while the office closes, you will need to keep a separate record or hours worked for this period.

If you are working from home there are expenses you could be claiming, make sure you keep track of any records for tax time. If you need any help with your tax and claiming work from home tax deductions on your expenses speak to your accountant.

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