The way we work is changing, and for many people working from home is the new normal. If you are an employee who works from home, you may be able to claim a deductions for expenses you incur.
You can choose one of three ways to calculate your additional running expenses for this tax year:
This method allows you to claim a fixed rate of 80c an hour for all running expenses incurred as a result of working from home, as opposed to calculating costs for specific expenses.
The method covers a range of running expenses including electricity for lighting, cooling, heating and the running of other electronic items: phone and internet costs: and the depreciation of various items spanning computers, laptops, home office furniture. The shortcut method is all-inclusive, you cannot then claim individual expenses such as telephone and internet costs.
To claim using the shortcut method you will need to keep a record of actual hours worked at home.
Fixed Rate Method
This method allows you to claim a fixed rate of 52 cents per hour for each hour you work from home and covers additional running expenses you incur for decline in value of office furniture, electricity and repairs to office equipment and furniture You may still calculate and claim your work related use of phone, internet, computer consumables (such as ink) and stationery and the decline in value of equipment such as phone, computer and laptops. Under this method you must keep records, such as receipts and phone bills identifying work calls and the actual number of hours worked.
Actual Cost Method
This methods allows you to claim the actual additional running expenses you incur for work from home. Using the Actual Cost Method, you work out your deduction from actual costs you incur such as: electricity, phone, internet, computer consumables (such as ink) and stationery and the decline in value of equipment such as phone, computer and laptops.
Under this method you must keep records, such as receipts, electricity bills and phone bills identifying work calls and the actual number of hours worked.
Remember to claim any work-related expense, you must have spent the money yourself and not been reimbursed.
The ATO has announced while all of these methods will allow employees to claim work from home deductions, personal expenses (coffee, tea, toilet paper) and occupancy expenses (rent, mortgage interest, rates, insurance), cannot be claimed through any method.
This article appeared in our May 2021 newsletter. Author: Renee Larsen