Courtesy of the Coronavirus more of us are working from home than ever before, leaving a lot of questions around what’s going to be claimable. So, what exactly can you claim come tax time?
Working from home means either you or your company will need to spend some money on essential items for your new “home office” that you require in order to do your job.
Couple this with the fact that tax time is fast approaching and you have the perfect recipe for stress and uncertainty about what this means for you.
People who have never worked remotely may not be aware of the possible tax deductions they’re entitled to whilst working from home.
What items can I claim when working from home?
Usually you can claim items that you’ve purchased out of your own pocket and have not been reimbursed for. This could include a laptop, office chair, desk, stationery, printer or monitor up to $300. It’s important to note, however, that any item you will use for both work and personal use needs to be apportioned. Any item over $300 needs to be depreciated – you can’t claim the costs in full.
You are also eligible to claim internet and mobile phone expenses if you’re using your personal phone and internet for work purposes. It can be a bit tricky to split it out, the best option is to keep a diary recording how much of each item you’ve used for work, you can then claim a proportion of your monthly bill as a deduction.
If your claim for phone and internet expenses comes under $50, you can estimate the number of work calls you make and do a basic calculation. The rates for work calls are $0.25 for calls made from your landline, $0.75 for calls made from a mobile and $0.10 for text messages.
Be honest with what you claim and don’t go overboard: if your employer wouldn’t be willing to confirm that you require an item in order to do your job, you shouldn’t claim it.
How about home office expenses?
Working from home will naturally see a rise in your expenses such as electricity, water and heating. The easiest way to claim on this is by calculating your running costs, especially if you’re working from home temporarily. Keep a diary recording how many hours you work from home, then claim at the new rate the government’s introduced of $0.80 per hour.
For example, if you’re now working at home full-time for 40 hours per week, it would be calculated as 40 hours x $0.80 x 48 weeks = $1536
You can also claim occupancy costs, which means calculating a specific amount for each expense you have based on the size of your home office vs the rest of your house. For example, if your home office is 20 square meters and your home is 100 square metres, for the period you work from home you can claim 20% of items such as electricity, water, heating, rent and so on.
Claiming occupancy costs can be tricky, so be sure to consult with your tax agent before doing so.
What records do I need to keep?
The key proof you need to claim for running expenses is a four-week work diary. This can be either a physical diary or electronic, as long as you have the correct information.
In this diary you should specify the date, the time you commenced work, the work activity, the time you finished the work activity as well as any breaks you took throughout the day. If you ever get audited, you need to be able to produce these records to prove the hours you worked.
Can I claim if I’m working from my kitchen table?
As of April 7, the Australian Tax Office announced that it’s no longer a requirement to have a dedicated work from home area in order to claim.
What if I already worked at home before Covid-19?
If you already worked at home some days but are now working additional hours, you need to keep two sets of records – one for the actual hours worked from home due to the coronavirus and the other for your usual hours worked.
