How to calculate your working from home expenses this tax time!

Amid the coronavirus crisis, most public sector workers were granted the right to work from home. Being able to work from home came with additional costs, such as new office equipment, higher electricity and internet bills. Some of you may be wondering how and what you can claim in expenses when working from home.

Thankfully, the Australian Tax Office (ATO) announced a new shortcut method that makes lodging your tax return easier, but it comes with a few extra restrictions. Here’s what you need to know this tax year. 

The ATO’s new shortcut method allows workers to claim a dedication of 80 cents per hour worked between 1 March 2020 to at least 30 June 2020. Workers intending on using this shortcut method need to prove they completed their pre-coronavirus job from home and not just completing minimal tasks like occasionally taking phone calls and sending emails. 

 

These are the items you can claim on in your tax return: 

  • Electricity expenses associated with heating, cooling and lighting the area you worked in

  • Associated electricity costs with running office equipment

  • Cleaning costs for your dedicated workspace

  • Phone and internet expenses

  • Computer consumables (eg. printer paper and ink) and stationery  

  • Home office equipment including, computers, printers, phones and furniture 

When it comes to home office equipment, the ATO will only allow you to claim either the full cost of an item UP TO $300 or the decline in value of individual items OVER $300 (Combined over $300 can be claimed but must have receipts). 

 

Expenses you can’t claim 

  • The cost of coffee, tea, milk and other general household items your employer may have otherwise provided for you at work

  • Costs related to children and their education, including setting them up for online learning, teaching them at home or buying equipment such as iPads and desks 

  • Items that you’re reimbursed for, paid directly by your employer of the decline in value of items provided by your employer, for example, a laptop or phone 

  • Time spent not working, such as home-schooling your children or your lunch break 

 

If you decide to use this method, you will still need to keep a record of the number of hours you worked from home, and this could be a timesheet, roster or diary. It’s also important to keep your purchase receipts for depreciating assets and the records of how you used the assets. 

To calculate your deduction for additional running expenses you can use this formula: 

 

< Total number of hours worked between 1 March and 30 June x 80 cents >

Public servants who work a set amount of hours each week, need to complete the above calculation to get their total. For example, if you work 20 hours per week regularly (excluding lunch breaks) and there are 17 weeks between 1 March and 30 June you just need to multiply 20 x 17 x 0.8 to get your total. Casual workers who have alternating hours each week need to save their rosters and note down the number of hours worked each week and do a similar calculation.

If you decide to use the shortcut method to claim a deduction, you must include the amount at the other work-related expenses question in your tax return and include ‘COVID-hourly rate’ as the description. 

If you don’t think this method is for you, you can check out the 52 cents fixed rate method or the actual cost method

Visit the Australian Tax Office website for more detailed information. 

Disclaimer: The CPSU/CSA is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances.