Corona Virus: Working from home… What can I claim?

If you are currently working from home, it’s good to know what you are entitled to claim...

With Coronavirus cases increasing everyday most employers are now implementing emergency measures to keep their companies open while retaining workers and a core component of this is to allow-or even require-employees to work from home for an extended time.

Working from home, however, comes with its own challenges, not least with the extra costs it imposes on the employees.

Think about it: increased utility bills, increased use of your personal mobile phone and home internet, and even increased expenses to keep your home work area clean and tidy, are just some of the additional costs that many would face as they respond to homework challenges.

Therefore, if you are one of the people who is currently working from home, it’s good to know what you are entitled to claim. We are putting this message out now because its important to keep records from now so we can assist you in maximising your home office deductions in your tax return when we assist you over the coming twelve months for your 2020 return.

 

What tax deductions can you claim?

If you work from home, you can claim the work-related proportions of household costs such as:

  • Heating, cooling and lighting bills;
  • Costs of cleaning your home working area;
  • Depreciation of home office furniture and fittings;
  • Depreciation of office equipment and computers;
  • Costs of repairing home office equipment, furniture and furnishings;
  • Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated);
  • Purchases of home office software, including antivirus, virtual meeting room subscriptions, and various cloud software products.
  • Computer consumables (like printer ink) and stationery; and
  • Phone (mobile and/or landline) and internet expenses.

You may think that if you operate from home using a home office, you would claim a percentage of rent or interest on a mortgage, but unfortunately, this is not allowable.

Whether you use a dual-purpose space (e.g. dining room), or a room shared with others (e.g. living room), you can only report the expenses for the hours you used the area exclusively.

So, how do you make your claim?

There are two methods:

Actual Expenses

You will need to keep a diary to work out the percentage of your household running expenses which relate to doing work in your home office. This diary will need to detail the time you spend in the home office as compared with other users of the home office (if any). Keep your diary record for a representative four-week period. The ‘work-use proportion’ you come up with over that four-week period can then be applied to all your actual expenditure over the course of the year. Of the two methods this usually produces the larger deduction but the record-keeping requirements are stricter.

Perhaps you already work from home from time to time however the amount of home-working will spike over the next few weeks or months. If that’s the case, keep a separate diary for the period of your ‘corona-induced’ home working to justify the larger claim over this period.  Remember……don’t try to apply this larger work-related proportion to the whole year!

Fixed rate per hour

The other alternative is to use the ATO fixed rate of 52 cents an hour for home office expenses.  This can include heating, cooling, lighting and the decline in value of furniture. You will need to keep a record of how many hours you use the home office and multiply it by 52 cents an hour.

In addition to claiming 52 cents per hour, you can also make a separate claim for:

  • phone and internet expenses;
  • computer consumables and stationery; and
  • depreciation of computers or other equipment.

However, if work has provided you with a laptop or any other materials, you cannot claim that.

But remember that you are responsible to keep detailed records to support any claim and before you can deduct them from income earned for the financial year.

 

When its time after 30th June for you to do your tax return with us bring in or email us your records so we can help you to maximise your refund. We can be contacted via email at dean@kennedysaccountants.com.au or phone 0418 566 635.

For even more info… https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/Working-from-home.pdf

– Dean Kennedy

Get In Touch

5 Hamilton Street, Gisborne

Macedon Ranges  Victoria  3437

dean@kennedysaccountants.com.au

0418 566 635

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