The Australian Taxation Office (ATO) has announced a new tax shortcut, making it easier for people to claim deductions for working from home (WFH).
The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.
Assistant Commissioner Karen Foat said the shortcut will make it easier for the many Australians who are working from home for the first time due to COVID-19.
“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” she said.
“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.”
How does it work?
Under the new arrangement, all you need to do is keep a record of the hours you worked from home starting from 1 March 2020 as evidence of your claim.
Multiple people living in the same house can claim this new rate, which means a couple living together could each individually claim the 80 cents per hour rate.
The requirement to have a dedicated work-from-home area has also been removed.
Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.
Can I still use the existing arrangements?
This new tax shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.
Therefore, there are now three ways you can choose to calculate your additional running expenses for the 1 March – 30 June period:
> claim a rate of 80 cents per work hour for all additional running expenses.
> claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device
> claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
The ATO is also reminding people that the three golden rules for deductions still apply: taxpayers must have spent the money themselves and not have been reimbursed, the claim must be directly related to earning income, and there must be a record to substantiate the claim.
The shortcut method initially applied from 1 March 2020 to 30 June 2020, however it can now be applied up until 30 September 2020.
More information on your working-from-home tax requirements is available here.