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Claiming working from home expenses

Sent home to work during the pandemic? You have options when it comes to claiming working from home expenses.

If you’re an employee who works from home, you may be able to claim a deduction for expenses you incur that relate to your work.

To claim your working from home expenses you must:

  • be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
  • incur additional expenses as a result of working from home.

Last year the Australian Tax Office (ATO) introduced the “shortcut method” ‘for employees to claim deductibles on home office costs. The shortcut method aims to simplify deductions by rolling depreciation costs and utility expenses, such as phone, internet, electricity, heating and cooling, into one. To claim this, employees need to work out how many hours they worked remotely between 1 July 2020 and 30 June 2021, then multiply this by 80 cents to find the deductible amount.

While anything containing the word “shortcut” sounds great, there is a slight catch… the shortcut method was only available from 1 March 2020 to 30 June 2021.

Employees now have a choice between the ATO’s “fixed rate method” and an “actual cost method”.

Fixed rate method

Also known as the “52 cent method”, this approach offers 52 cents for every hour you work from home, but you are also able to claim work-related tools such as phone and internet costs and the depreciation on your computer. While most people prefer the sound of the shortcut method’s 80 cents over 52; the fixed rate method may actually result in a larger claim at the end of the financial year.

To use the fixed rate method, you will need to have used a dedicated work area. This can be a home office, a converted bedroom or a shed…the key is that you only use this area for work.

Actual cost method

To use the actual cost method, you must:

  • incur additional running expenses as a result of working from home
  • keep records, for example receipts or other written evidence, which show the amount:
    • you spend on expenses
    • you spend on depreciating assets you buy and use while working from home
    • of work-related use for your expenses and depreciating assets.

You don’t incur additional running expenses if other members of your household (who are not working from home) are in the same room as you while you are working from home.

Like to know more about claiming working from home expenses? Check out the ATO’s “Working from home expenses” page.

Bare Bones Consulting will never claim to be experts in taxation. We recommend our clients find themselves a good Accountant or Tax Agent and leverage off this expertise. Once that’s done, why not speak to a HR expert? Click here for our suggestion!

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Note: Bare Bones Consulting provides HR services for employers. Employees seeking advice on workplace concerns should contact the Fair Work Infoline on 13 13 94.