Last week the ATO announced a temporary simplified ‘short cut’ method aimed to make it easier for individual taxpayers to claim tax deductions for additional expenses incurred as a result of working from home due to the current pandemic – Covid-19 or Coronavirus.
In our recent blog – Find yourself working from home? What will you be able to claim? – we outlined some of the expenses that will make up your tax return this year.
The new simplified rules the ATO have announced an increase in the home office deduction cents per hour from 52 cents to 80 cents for each hour for the period 1 March to 30 June 2020. This covers all running costs including:
Electricity expenses associated with heating, cooling and lighting the area at home which is being used for work
Cleaning costs for a dedicated work area
Phone and internet expenses
Computer consumables (eg paper, ink) and stationery
Depreciation of home office furniture and furnishings (eg desk and chair)
Depreciation of home office equipment (computer, printer etc)
It’s important to note that if you choose to claim under the 80 cents per hour method, separate claims cannot be made for any of the above running expenses. Therefor, using this method could result in a lesser than possible claim.
Whilst this is good news care must be taken if you are considering adopting the new 80 cents/hour rate for the eligible period. Our recommendation is that you keep track of your hours worked from home for the whole year but especially during this current period, and of all costs for working at home so your claims can be maximised.
As a guide, assume you do 40 hours work from home per week, the additional deduction would be 13 weeks x 40hours = 520hours x 28 (80 – 52) cents per hour = $146
It is quite possible the deduction for the additional items listed above would be in excess of this amount.
If you have any questions please don’t hesitate to contact us for a chat.