Temporary tax shortcuts available for people working at home

tax shortcuts, remote working, home, working from home, WFH, work-from-home

The Australian Taxation Office (ATO) has announced that a temporary shortcut method is available to those claiming work from home deductions this year. The working from home shortcut method allows claims at the all-inclusive rate of 80 cents per hour, rather than having to manually compute for specific items. The temporary shortcut was created at the height of the pandemic last year to respond to the spike in makeshift home workspaces.

“Even with people shifting back to the office, we know many Australians have opted to continue working from home at least one day a week,” ATO Assistant Commissioner Tim Loh said. “The shortcut method is straightforward; just multiply the hours worked at home by 80 cents. The only proof you need is a record of the number of hours you’ve worked from home, such as a timesheet.”

The shortcut method can be claimed by multiple people living under the same roof and does not require a dedicated work area. It is also inclusive for all expenses, so claims for individual expenses on top of the shortcut such as telephone and internet costs are not allowed.

Claims are also not allowed for the following expenses:

  • If one chooses to claim working from home expenses through the fixed rate or actual cost methods.
  • Personal expenses like coffee, tea and toilet paper, even if they might normally be supplied by the employer since they are not related to the earning of income.
  • Expenses related to a child’s education.
  • Assets that costs over $300 (either in total or per item) can’t be claimed immediately but should be spread out over a number of years.
  • Occupancy expenses such as rent, mortgage interest, property insurance, land taxes and rates. The ATO reminded that the home should not be declared a place of business for tax purposes, otherwise one must pay capital gains tax when the home is to be sold.

“If you decide to go with an existing method, I would encourage you to do your research and keep good records,” Loh said. “Keeping track of each individual expense and calculating the work-related use of each one can be fiddly so be organised. So, make sure you’ve read the guidance on our website or chat to your registered tax agent.”

Taxpayers can choose one of three ways to calculate their additional running expenses for this tax time:

  • claim a rate of 80 cents per work hour at home for all working from home expenses;
  • claim a rate of 52 cents per work hour at home for the heating, cooling, lighting and cleaning of the work area and the decline in value of office furniture and furnishings. Then calculate the work-related portion of your telephone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device; or,
  • claim the actual work-related portion of all running expenses, which should be calculated on a “reasonable” basis.

The ATO also stressed that, for claims on any work-related expense, taxpayers must have spent the money themselves and not been reimbursed, the expense must be directly related to earning income (not a private expense), and they must keep any necessary records (a receipt is best).