18 February 2021
Wondering how you’ll calculate those work-from-home expenses at tax time? AR Advisors has the low-down on an ATO short-cut. You can stop hunting for those receipts now.
If you’ve already lost the receipt for that emergency work-from-home printer or haven’t got time to calculate the cost of the extra electricity your recent WFH arrangement has incurred, don’t panic. There is a temporary short cut that makes it easy to claim a tax deduction if you’ve had to work from home as a result of COVID-19.
Introduced in April 2020 and extended until 30 June 2021, the ATO’s simplified method allows taxpayers to claim a flat rate of 80 cents per hour for all running expenses while they work from home.
Why is this good news? Many small businesses owners – and no doubt their employees – will be breathing a sigh of relief because it means they won’t need to calculate their actual work-at-home expenses.
The simplified method takes into account phone and internet expenses, costs associated with electricity and gas for cooling, heating and lighting, consumables such as printer ink and stationery, and even the diminishing value of the equipment and furniture used.
Here are the key things to remember about the short-cut method:
Hours: You don’t need a dedicated office space at home, but you do need to have kept a record of the hours you’ve worked at home during the relevant time periods. This could be a timesheet, roster or diary, for example. Remember to deduct any time you took a break during your work hours.
Duties: You were fulfilling your employment duties and not just carrying out tasks such as occasionally checking emails or taking calls.
Expenses: You did incur additional running expenses as a result of working from home.
Your choice: You don’t have to use the short-cut method. You can claim using the actual cost method or the fixed-rate method of 52 cents per hour plus the work-related portion of expenses such as phone and internet. You can choose which method will give you the best outcome. Your accountant, business advisor or registered tax professional can help with this.
Timeframe: The short-cut method can be used to calculate work-from-home expenses for the period 1 July 2020 to 30 June 2021 for 2020-21 tax returns. It can also be used for the period 1 March 2020 to 30 June 2020 for the 2019-20 income year.
Individual claims: If more than one of you have been working from your home, you can all make individual claims using the 80-cents-per-hour rule.
The ATO has said it may make the short-cut method available beyond the end of the 2020-21 financial year, depending on when work patterns return to normal.