Understanding Your Eligibility

If you have been working from home, you may be eligible to claim certain expenses on your tax return. To qualify, you must actively work from home and incur additional expenditure necessary to carry out your duties efficiently.

What Can You Claim?

Home Office Expenses

• Internet or Wi-Fi expenses: Costs incurred for your home internet used for work purposes.
• Telephone billing expenses: Work-related calls made from your home phone or mobile.
• Depreciation of equipment: Value depreciation of office furniture and related items such as desks, chairs, computers, printers, and telephones.
• Electricity costs: Lighting, heating, or cooling your workspace.

Occupancy Expenses

You may be able to claim a portion of your home occupancy expenses if:

• Your employer does not provide office facilities, or
• You have a clearly designated work area used exclusively for work purposes.

Occupancy expenses can include:

• Mortgage interest
• Rent
• Council and water rates
• Land taxes
• House insurance premiums

Methods to Calculate Deductions

1. Revised Fixed Rate Method

Explanation:

The Revised Fixed Rate Method allows you to claim a fixed rate of 67 cents per hour for each hour you work from home. This rate covers the following expenses:

• Heating, cooling, and lighting
• Cleaning of your dedicated work area
• Decline in value of office furniture and furnishings

In addition to the 67 cents per hour, you can also separately claim the work-related portion of:

• Phone and internet expenses
• Computer consumables (e.g., printer paper and ink)
• Decline in value of computers, laptops, or similar devices

Example:

Sarah works from home 20 hours a week for 48 weeks in a year. She keeps a record of her hours worked.

• Total hours worked: 20 hours/week × 48 weeks = 960 hours
• Claim using the fixed rate method: 960 hours × $0.67 = $643.20

Sarah can also claim the work-related portion of her phone, internet, and computer consumable expenses separately.

2. Actual Cost Method

Explanation:

The Actual Cost Method allows you to claim the actual expenses you incur as a result of working from home. This method involves calculating the work-related portion of each expense.

Expenses you can claim include:

• Electricity and gas for heating, cooling, and lighting
• Decline in value of home office furniture and furnishings
• Decline in value of office equipment and computers
• Phone and internet expenses
• Computer consumables and stationery

Example:

John works from home and incurs the following expenses annually:

• Electricity: $1,200
• Internet: $600
• Office chair (depreciated over 5 years): $200
• Computer (depreciated over 3 years): $1,500

John calculates the work-related portion of these expenses based on the percentage of time he uses them for work and the space his home office occupies.

• Electricity: 20% work-related use = $1,200 × 20% = $240
• Internet: 50% work-related use = $600 × 50% = $300
• Office chair depreciation: $200 ÷ 5 years = $40/year; 100% work-related use = $40
• Computer depreciation: $1,500 ÷ 3 years = $500/year; 100% work-related use = $500

Total claimable amount = $240 (electricity) + $300 (internet) + $40 (chair) + $500 (computer) = $1,080

3. Shortcut Method

Explanation:

The Shortcut Method was introduced as a temporary measure during the COVID-19 pandemic. This method allows you to claim 80 cents for each hour you work from home and covers all additional running expenses.

This method is available for the following periods:

• 1 March 2020 to 30 June 2020 (2019-20 income year)
• 1 July 2020 to 30 June 2021 (2020-21 income year)
• 1 July 2021 to 30 June 2022 (2021-22 income year)

Example:

Emma works from home 25 hours a week from 1 July 2021 to 30 June 2022.

• Total hours worked: 25 hours/week × 52 weeks = 1,300 hours
• Claim using the shortcut method: 1,300 hours × $0.80 = $1,040

The shortcut method simplifies the calculation as it includes all expenses, so Emma does not need to calculate the work-related portion of individual expenses.

Expenses You Cannot Claim

• General household or cleaning items.
• Costs related to children’s education and related equipment.
• Items provided by your employer such as laptops and phones.
• Expenses reimbursed or paid by your employer.

How to Claim

1. Record Keeping: Ensure you keep a record of all expenses incurred, including receipts.
2. Choose a Method: Select the method that best suits your WFH circumstances.
3. Submit Your Claim: Follow the ATO guidelines to submit your tax return.

Concerned About Calculating Things Wrong?

We organize a personal tax checklist tailored specifically for you to ensure you claim all eligible deductions. Our online process involves:

• Filling in a new client form on our website.
• Preparing your Tax Return electronically.
• Receiving your refund within two weeks.
• Signing and submitting your Tax Document.

Based on ATO guidelines:

1. Eligibility: To claim WFH expenses, you must be working from home and incur additional costs directly related to your work.
2. Claimable Expenses: Home office expenses like internet, phone, depreciation of equipment, and electricity are eligible. Occupancy expenses can also be claimed if you have a dedicated work area.
3. Calculation Methods: The ATO provides options such as the Revised Fixed Rate Method, Actual Cost Method, and the Shortcut Method for calculating WFH expenses.
4. Non-Claimable Expenses: General household items, children’s education costs, and employer-provided or reimbursed items cannot be claimed.

For the most accurate and updated information, always refer to the ATO’s official website or consult a tax professional.

Summary

• Revised Fixed Rate Method: Claim 67 cents per hour for general home office expenses, plus work-related portions of phone, internet, and consumables.
• Actual Cost Method: Claim the actual work-related portions of all home office expenses.
• Shortcut Method: Claim 80 cents per hour for all expenses, available only for specific periods during the COVID-19 pandemic.

Each method has its advantages, and the best choice depends on your specific situation and the nature of your work-from-home expenses. Ensure you keep accurate records and receipts to support your claims. For more detailed guidance, refer to the ATO’s official website or consult a tax professional.