Due to COVID-19 your working arrangements may have changed. If you have been working from home, you may have expenses you can claim a deduction for at tax time.
Tracking these expenses can be challenging, so from 1 March to 30 June 2020, ATO have introduced a temporary shortcut method. It’s a simple way to calculate these expenses with minimal record keeping requirements. ATO may extend this period, depending on when work patterns return to normal.
In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.
For more information about working from home prior to 1 March, or the other methods you can use to calculate your working from home expenses, visit Home office expenses
Claiming a deduction
To claim a deduction for working from home, all of the following must apply:
- you must have spent the money
- the expense must be directly related to earning your income
- you must have a record to prove it.
This means you cannot 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 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 for the expenses you incur.
Expenses you can claim
If you work from home, you will be able to claim a deduction for the additional 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 cannot claim
If you are working from home, you cannot claim:
- the cost of coffee, tea, milk, and other general household items your employer may otherwise have 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 are reimbursed for, paid directly by your employer or the decline in value of items provided by your employer – for example, a laptop or a phone
- time spent not working, such as time spent home schooling your children or your lunch break.
Employees generally cannot claim occupancy expenses such as rent, mortgage interest, water, and rates.
Calculating your expenses
There are three ways of calculating home office expenses depending on your circumstances. The methods are the:
- Shortcut method (80 cents) – only available 1 March to 30 June 2020
- Fixed rate method (52 cents)
- Actual cost method
You do not have to use the shortcut method. You can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome, as long as you meet the criteria and record keeping requirements for each method. For information and examples on how to calculate your expenses prior to 1 March or to use the fixed rate or actual cost methods, see Home office expenses.
You can claim a deduction of 80 cents for each hour you work from home from 1 March to 30 June 2020 as long as you:
- are working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls
- have incurred additional running expenses as a result of working from home.
The shortcut method does not require you to have a dedicated work area, such as a private study.
The shortcut method covers all additional deductible running expenses, including:
- electricity for lighting, cooling, or heating and running electronic items used for work (for example your computer), and gas heating expenses
- the decline in value and repair of capital items, such as home office furniture and furnishings including capital items that cost less than $300
- cleaning expenses
- your phone costs, including the decline in value of the handset
- your internet costs
- computer consumables, such as printer ink and stationery
- the decline in value of a computer, laptop, or similar device.
You do not have to incur all of these expenses to use the shortcut method, but you must have incurred additional running expenses in some of these categories when working from home.
If you use this method, you cannot claim any other expenses for working from home for that period.
When you are calculating the number of hours you worked from home, you need to exclude any time you took a break from working, for example the time you spent to stop and eat your lunch or to assist your children with home schooling.
Records you must keep
You must keep a record of the number of hours you have worked from home. This could be a:
- diary, or
- similar document that sets out the hours you worked.
If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses.