A new short-cut method for claiming expenses during COVID-19

COVID-19 short-cut method for claiming home office expenses

 

The Australian Taxation Office (‘ATO’) has announced a temporary simplified short cut method to make it easier for individual taxpayers to claim deductions for additional running expenses incurred as a result of working from home due to the Coronavirus pandemic. 

 

Eligibility

To be eligible 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.
• The item cannot have been provided to you by your employer
• You cannot have already been reimbursed for the expense by your employer

 

SHORT-CUT METHOD

For the period starting 1 March 2020 until at least 30 June 2020 you can claim a rate of $0.80 per 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.

 

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 (i.e. An item whose value is over $330 inc GST)
• cleaning expenses
• your phone costs, including the decline in value of the handset
• your internet costs
• stationary
• home office equipment that is under the value of $330 inc GST
• the decline in value of a computer, laptop or similar device.

 

Requirements to claim:

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

 

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 only need to 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.

 

ALTERNATE METHODS

If you do not wish to claim using the ‘Short-cut method’, the other methods of claiming home office expenses are still available. Those are:

• The Fixed Rate method, under which you could claim all of these:
  • a rate of $0.52 per hour worked for heating, cooling, lighting, cleaning and the decline in value of office furniture,
  • the work-related portion of your actual costs of phone and internet expenses, computer consumables, and stationery (provided the computer consumable and stationary have a value of less than $330 inc GST)
  • the work-related portion of the decline in value of a computer, laptop or similar device (this will need to be done on your ITR).
• The Actual Cost method, where you would claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

If you require further information on this, please visit the ATO’s website.