The ATO has provided a simple solution to determining the deductibility issues surrounding home expenses.
To claim a deduction for working from home, all of the following must apply:
If you are not reimbursed but receive an employer allowance to cover these expenses you:
Expenses you can’t claim are:
Ordinarily this overall methodology may be applied by using either the;
1. Actual Cost method – claiming:
2. Fixed Rate method – claiming all of:
As these can be complex the ATO will accept an alternative Shortcut method of calculating additional running expenses for the period starting 1 March 2020 until at least 30 June 2020. The period may be extended depending on when work patterns return to normal.
3. Shortcut method
Under the Shortcut method you can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:
You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.
The Shortcut method rate covers all deductible running expenses, including:
You do not have to incur all of these expenses, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.
If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction using any other method.
You must keep a record of the number of hours you have worked from home as a result of COVID-19. Examples of records are timesheets, diary notes or rosters.
Under the shortcut method, you only need to keep a record of the hours you worked at home.
If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses.
We understand that this is an uncertain and confusing time for everyone. If you have any questions or wish to speak to us further regarding the above, please do not hesitate to contact us or your accountant.