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COVID-19 Working From Home expenses that could be claimed…

By 30 April 2020No Comments

Now that we are all tucked up at home working, there may be some expenses you can claim…

The government has created a temporary simplified method (or shortcut method) of calculating additional running expenses from 1st March until at least 30th June 2020. They may extend the period depending on when work patterns return to normal.

Basically they are allowing you $0.80 cents per hour tax-free to cover off all cost for running at home.

You should also look at other expenses that are not being covered by your company like a new computer, laptop, screen etc as they could be claimable as well…

Claiming a deduction

To claim a deduction for working from home, all of the following must apply

  • You have spent the money
  • The expenses must be directly related to earning your income
  • You must have a record to prove it (keep the receipt)

This means you can’t claim a deduction for items provided by your employer, or if you have been reimbursed for the expense.

If you are not reimbursed by your employer, but instead receive an allowance from them to cover your expenses when you work from home, you:

  • Must include this allowance as income in your tax return
  • Can claim a deduction as outlined

Expenses you can claim

If you work from home, you will be able to claim a deduction for the additional running expenses you incur. These include:

  • electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
  • cleaning costs for a dedicated work area
  • phone and internet expenses
  • computer consumables (for example, printer paper and ink) and stationery
  • home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the
    • full cost of items up to $300
    • decline in value for items over $300.

Expenses you can’t claim;

If you are working from home only due to COVID-19, you can’t claim:

  • occupancy expenses such as mortgage interest, rent and rates
  • the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work.

Calculating running expenses…

There are three ways you can choose to calculate your additional running expenses:

  • shortcut method ─ claim a rate of 80 cents per work hour for all additional running expenses
  • fixed rate method ─ claim all of these
    • a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture
    • the work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery
    • the work-related portion of the decline in value of a computer, laptop or similar device.
  • actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

For more information on how to calculate and claim a deduction under the actual cost method or fixed rate method see Home office expenses.

We would recommend you seeking advice from your accountant before doing so…

We are also making sure all our employees and in particular contractors running through us are being advised accordingly… if you are a contractor and would like further advice please don’t hesitate to contact us or reach us at [email protected].

Purnima Kabra