A win for work from home workers and small business
Good news for people who have been working from home over the recent lockdown, the work from home shortcut method will be extended for the 2021-22 year.
The method provides a simple basis for individuals and small business to claim home office expenses with an all-inclusive rate of of $0.80 per hour. This rate overs all home office expenses including phone expenses, internet expenses, depreciation on furniture & equipment and electricity and gas.
Alternative methods
Besides the shortcut method, you can opt to use the fixed rate method or the actual cost method to claim your work from home deductions.
The fixed rate method allows 52 cents per hour deduction for lighting, heating, cooling . This method is simple and more commonly used as it does not require full substantiation of actual expenses.
It is important to note that this method covers running expenses only, and other costs such as depreciation for laptop and devices, phone and internet can be claimed on top.
The third alternative, the actual cost method is most onerous as it requires detailed usage records to work out the percentage of the work from home portion from total household expenses. The basis of apportionment or calculating the work related percentage varies depending on the expense and include floor area of the dedicated home office as a percentage of the total floor area, the duration of work or business use for , or the number of occurrences. For intense work from home patterns, this method may result in a larger claim.
Is the shortcut rate the best rate to use?
The short answer is it depends on the pattern and intensity of your work from home and the types of expenses involved and may vary for the same taxpayer from year to year. No one method is always the best to use. The optimum outcome may require the clever application of more than one method.
Our team can help choose the method or combination that provides the highest deduction while ensuring you are 100% compliant with the substantiation rules.
Source: ATO
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Disclcaimer: The information provided within this article is general information only. None of the comments in these notes are intended to be advice, whether legal, financial product or professional. You should obtain specific advice regarding your particular circumstances from a tax or legal professional.
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