The Australian Government has announced several new working from home tax developments that could impact you in 2022.
With tax season coming up, it is important that you keep a record of your working from home expenditure so that your end of financial year is a breeze. If you are an individual working from home, it can be confusing to know what items you can claim, and what items you can’t. That’s why we have compiled an easy guide to tax season 2021.
The main changes that might impact you
Marginal income brackets
The 2021 upper limit of some marginal income brackets for individuals have increased, with:
- The 19% tax band increasing from $37,000 in 2020 to $45,000; and
- The 32.5% tax band increasing from $90,000 in 2020 to $120,000.
Superannuation
From 2022, the superannuation general transfer balance cap will increase from $1.6 million for 2021 to $1.7 million. The non-concessional contributions cap will increase from $100,000 for 2021 to $110,000 and the concessional contributions cap will increase from $25,000 for 2021 to $27,500.
How to claim your WFH expenses
Because tracking your working from home tax expenses can be challenging, the ATO have introduced a temporary shortcut method. This is a simplified method to calculate your expenses with minimal record keeping requirements. This is available until 30 June 2021, but may be extended.
Requirements for claiming work-related expenses
The main requirements for claiming an expense as work-related are:
- You must have spent the money
- The expense must be directly related to earning your income
- You must have a record to prove it
You are required to keep a record of the hours you worked from home. This could be:
- A timesheet
- A roster
- A diary
Expenses you can claim
You can claim a deduction for additional expenses you incur. These include:
- Electricity costs from heating, cooling and lighting your home office/work area and powering your work related items (such as computer) while you are working
- Cleaning costs for your home office/work area
- Internet and phone expenses
- Printer paper, ink, and stationery
- Home office equipment (computers, printers, phones, furniture etc)
Expenses you can’t claim
Some items, you can’t claim (as much as we wish we could!):
- Coffee, tea, milk
- General household items
- COSts related to your kids education
- Items your employer pays for (for example, your work laptop or phone)
- Rent, mortgage interest, water, etc
Disclaimer: While we do want you to get the most out of the end of financial year and stay updated with tax changes, please note that we are not tax advisors! For tax and financial advice, talk to your advisor, hop on the ATO (Australian Taxation Office) website or consult a registered tax advisory business or BAS agent. The ATO offers short online courses for people in business to update their knowledge, as well as online services for business to give you more payment options.
