A large number of Australian businesses now require most, if not all of their employees to work from home. As a result, the Australian Taxation Office (ATO) has given workers a simpler way to claim tax deductions working from home. The new announcement allows individuals to claim a rate of 80 cents per hour for all running expenses while working from home, instead of needing to calculate costs for specific running expenses. This is up from 52 cents previously.
This claim is for heating, cooling, lighting, cleaning and so on. The usual substantiation requirements are still in place – for example, you need to have evidence (e.g. a diary) of the hours you worked from home.
Currently, one needs to have a dedicated “work from home area” at home (e.g. a home office) to make working from home claims. This requirement is also removed. The ATO also said multiple people living in the same home can all make individual claims using the 80 cents per hour rate.
The new arrangement only applies to expenses incurred after March 1, 2020, and individuals can still choose to make a working from home claim under existing arrangements that involve calculating all or part of their running expenses. Please contact us if you would like to know more about this method as it may still result in a higher claim depending on your personal circumstances.
There is not yet an end date on the new arrangement but the ATO says it will review it in the next (2021) financial year.
Don’t forget also there are other expenses that can still be claimed in addition to the above, such as decline in value of office equipment, Internet connection, cost of software purchased for work and mobile phone usage. Mobile phone usage is also subject to some administrative short-cuts with a standard $50 fixed deduction per year being allowed. Otherwise, an apportioned deduction based on actual expenses is required – and that can be quite rigorous, requiring a diary to be kept for a representative 4-week period.
Please contact your MGI advisor if you are unsure what you may be entitled to claim.