COVID-19 Home Office Deduction|Wilson & Assoc Chartered Accountants

Working from home because of COVID-19? Claim a higher home office deduction.

The ATO has announced a simplified shortcut method for individual taxpayers to claim a home office deduction for working from home as a result of to the Coronavirus shutdown.  You can claim 80 cents per hour for the period from March 1 to June 30, 2020. 

The Shortcut Method

What is the shortcut method?

The shortcut method allows 80 cents per hour to cover all deductible running expenses associated with working from home and incurred from 1 March 2020 to 30 June 2020, including the following:

•  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 (e.g., printer paper and ink) and stationery.

•  Depreciation of home office furniture and furnishings (e.g., an office desk and a chair).

•  Depreciation of home office equipment (e.g., a computer and a printer).

Is it always the best method?

Using this method could result in a lower claim than using the existing method, which allows 52 cents per hour plus separate running expenses. Click here for details of the 52 cents method.

That said, the requirements of the shortcut method is less stringent:

(a) there is no requirement to have a separate or dedicated area at home set aside for working (e.g., a private study);

(b) multiple people living in the same house could claim under this method (e.g., a couple living together could each individually claim running expenses they have incurred while genuinely working from home, based on the 80 cents per hour method); and

(c) an individual will only be required to keep a record of the number of hours worked from home as a result of the Coronavirus, during the above period. This record can include time sheets, diary entries/notes or even rosters.

Can I use this method for the whole 2019-20 year?

Working from home running expenses that are incurred before 1 March 2020 (and/or incurred from this date where an individual does not use the 80 cents per hour method) must be claimed using existing claim arrangements. Broadly, these existing claim arrangements require:

•  an analysis of specific running expenses incurred as a result of working from home; and

•  more onerous record-keeping, such as the requirement to provide receipts and similar documents for expenses being claimed, as well as the requirement to maintain a time usage diary or similar record to show how often a home work area was used during the year for work purposes). 

 

Source: NTAA

 

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