Make Working from Home Less Taxing

With no commute and casual Friday turning to casual every day, there’s a lot to love about working from home. But when the cat keeps hijacking your Zoom calls and Friday drinks end up being with said cat, it has its downsides too. Thankfully, the tax man is offering a bit of socially distanced relief for those of us still working from home in our pyjamas.

As you’d expect, more Australians than ever are working from home – 68% of the workforce, by one estimate. The Centre for Future Work, a leading think tank, reckons COVID-19 could spark the end of normal work patterns. (‘Good riddance’, we hear you say.)

The Australian Taxation Office is keeping up with these unprecedented times by offering new tax deductions. So a little of that extra money you’ve been spending on central heating and phone bills could find its way back into your pocket this tax time.

It’s not quite a full stimulus package, but it might help pay for the 72 toilet rolls you stockpiled (if you’re one of those).

The 80 cents method – for when you hate receipts

For anyone who has always maintained a home office, the general rule of thumb has been to keep receipts of relevant costs like household power and internet, then only claim the portion of those expenses that relate to work.

Sound tedious? We agree.

It’s a method that calls for plenty of receipt filing and a few calculations, and it typically applies to people who run a business from home.

The good news is, if you’ve been working from home because of the Coronavirus pandemic, instead of sorting through boxes of receipts you can just claim a flat rate of 80 cents per hour for every hour worked from home. This is designed to cover all your costs from internet access through to stationery.

All you need to do is record the hours worked from home. So be sure to keep time sheets. You don’t even have to have a separate or dedicated area of your home set aside for working, such as a private study.

Under this method, if you worked, say, eight hours a day from home, five days a week, you may be able to claim a tax break of $32 per week. But you can only use the 80 cents per hour rule for the period between 1 March and 30 June.

52Cent – better than wrapping up

Or, you can choose another method – claiming 52 cents per hour worked from home for costs like heating, cooling, lighting, and depreciation of your furniture. Then on top of this, you can also claim a deduction for work-related phone, internet, and stationery plus depreciation in the value of your computer.

This option may give you a bigger deduction if, for example, you’re a big internet user.

But you will have to keep that big box of receipts.

To get the dime, you’ve got to do the time

One pitfall to be aware of is that in order to claim work from home costs, you need to be working. You can’t claim work from home costs if you were on leave or were stood down during the Coronavirus pandemic.

So, no funny business.

If you’ve been stood down for example, just checking the occasional email from the boss or staying in touch with your employer over the phone, doesn’t count as working from home.

If you’re not sure if you’re eligible to claim work from home costs, or to decide which method works for you – leave it to the experts. Talk to your tax agent or accountant or jump onto the tax office website for more details.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not tax or financial product advice.