Working from home? How to claim your home office tax deductions

If you are now working from home as a result of the coronavirus crisis, then let's talk about tax baby. Wait, hang in there. This will only take 52 seconds to read and will save you 52¢ per hour (that you work from home) on your tax return!

If you work from home you can claim for home office expenses in your tax. The simplest way to do this is to use the "rate per hour" method. This where the ATO allows a flat rate of 52¢ per hour to cover home-office expenses for heating, cooling, lighting and the value of furniture, without the need to keep details of actual costs. Keep a record of the hours you use the home office, multiply that by 52¢ per hour. Then deduct the total from income earned in your tax returns for the financial year ending on June 30.

In addition to claiming 52¢ per hour, you can also make a separate claim for:

• phone and internet expenses;
• computer consumables and stationery; and
• depreciation of computers or other equipment - lucky for you the ATO has a home office expenses calculator that includes guidance on claiming depreciation.

Okay, our 52 seconds is up - but you've just saved yourself an extra $0.0086 on your tax in the time it took you to read this!

We do have a small word of warning: it is quite common for people to have insufficient documentation to support a home office claim, particularly around the proportionate split between business use and personal use so be sure to keep records.

Also, just remember that laptops or phones provided by your employer while working at home cannot be claimed for tax purposes.

Finally, about one-third of you will do your own tax returns. You may want to consider getting help from a tax adviser this time round (fees for that are tax deductible too).

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COVID-19 Update

You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 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,
• incurring additional deductible running expenses as a result of working from home.

You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.

The shortcut method rate covers all 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
• cleaning expenses
• your phone costs, including the decline in value of the handset
• your internet costs
• computer consumables, such as printer ink
• stationery
• the decline in value of a computer, laptop or similar device.

You do not have to incur all of these expenses, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.

If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above.

You must keep a record of the number of hours you have worked from home as a result of COVID-19. Examples are timesheets, diary notes or rosters.

If 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.

Records you must keep

If you use the shortcut method, you only need to keep a record of the hours you worked at home, for example timesheets or diary notes.

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. For more information on what those records are see Home office expenses.

More information

For more information, visit ato.gov.au/home or speak to a registered tax professional.

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