In this pandemic situation, we have no choice but to work from home to stop the spread.
There are some expenses you might be able to claim for your 2020 tax return. In order to claim as deductions, these criteria have to be met,
- you must incurred these expenses eg, spent the money
- these expenses must be directly related to earning your income
- you cannot claim these expenses from your employer- you are also not allowed to claim expenses that are provided by your employer
However, if you are given allowance from your employer to cover your expenses while working from home,
- you must report this allowance as income in your tax return
- and you can claim the above expenses as mentioned above in your tax return
The List of Expenses that you can claim
When you are working from home, these are the expenses you are eligible to claim in your deductions. They are claled running expenses and include:
- your internet connection, ie WiFi
- your mobile phones to make phone calls with your colleagues or clients
- mobile phones data plan
- utility expenses such as electricity used for heating, cooling, lighting, power for your workstations etc.
- stationeries such as paper, printer ink for printing, pens, thumb drive etc.
- home office equipment such as laptop, printer, chairs, desks
- cleaning costs for your work area
- you are allowed to claim full $300 as deduction in your tax return
- otherwise, claim as decline in value for items over $300 in your deductions
The Period to qualify for deductions
You are able to claim the above expenses from 1 Mar 2020 to 30 Jun 2020.
However depending on the outcome of this pandemic situation, the period to claim these expenses for deduction might be extended.
Expenses that you are not allowed to claim
Some of the expenses you incurred while working from home are not qualified to claim as deductions in your tax return.
These expenses that are not eligble for deductions are:
- occupancy costs such as rental, council rates, strata, mortgage interests
- beverages such as coffee, milk, hot chocolate, tea
- general household items such as laundry detergent, dish washing liquid etc.
Methods to calculate the Running Costs
Three methods to calculate the additional running expenses:
- actual cost most commonly used – you can claim only a reasonable portion of the actual costs that related to work
- simplified way – you claim 80 cents per work hour as your additional running expenses
- or the fixed rate method widely used
- a portion of your actual costs use for phone, internet, stationeries and other home office expenses that are related to work
- 52 cents per work hour for power, cleaning and decline in value of home office furniture
- decline in value of home office equipment such as laptop, desktop, mobile phone, tablets etc.
To use a Shortcut Method
There are criterias to meet to claim 80 cents per hour working from home during COVID-19. You must prove the following,
- you have to complete the full duties as if you are working in the office
- you cannot work only the minimal tasks such as checking emails or taking phone calls
- you incur additional expenses while working from home
You are not required to proof that you have a separate or dedicated area as your home office.
The deductible running expenses you incurred while working from home including,
- power used for work such as lighting and laptop
- power for heating or cooling
- cleaning costs for your work area and home office equipment
- your internet and phone bills
- computer acccessories such as thumb drives, cables, printer ink, etc.
- stationeries such as pen, paper, pencil, eraser etc.
- depreciation value in home office equipment such as monitor, desktop, laptop, notebook etc.
Records to keep and maintain
Always keep a record of expenses incurred and number of hours works as a result of this pandemic COVID-19 situation.
COVID RATE
To use a Shortcut method for your deductions in the 2019-2020 tax return, you have to include a note to say COVID HOURLY RATE.
f you use the shortcut method to claim a deduction and you lodge your 2019-20 tax return through myGov or a tax agent, you must include the note ‘COVID-hourly rate’ in your tax return.
Reference taken from ato.gov.au