The world has changed so much over the last couple of years, and with it the way we work. This has raised some issues in our tax returns, and affected what you can claim as a deduction for expenses incurred in working from home…
Some are obvious, but some not so much.
Let’s unpack it a little, so you can know where you stand at tax time.
Eligibility:
If you work from home and it has resulted in additional expenditure to complete your work, you can claim a deduction for these expenses.
Deductions:
Electricity costs for lighting, heating, cooling and running computer equipment
Internet or WiFi used for work purposes
Depreciation on furniture, computers, printers and phones
Also, depending on your situation, you could potentially claim “Occupancy Costs” such as mortgage interest, insurance, and rates, or a portion of rent. These costs are rarely claimable for employees, and there are some really stringent requirements for claiming…usually allocated on a floor area size. These claims CAN make you liable for Capital Gains Tax when you sell your home, so be very wary of claiming, especially if it is for a temporary period.
Claiming WFH Expenses:
There are 3 acceptable methods, all resulting in very different outcomes
- Fixed Rate – where you claim a fixed rate of 52c per hour for your time working from home. Records or diary of your activity should be kept as evidence.
- Actual cost – this is a lot more onerous, and you must keep all records for the costs and how you have calculated the work related portion.
- Shortcut Method – this is temporary, and is all-inclusive … a flat rate of 80 cents per hour is claimed for every hour of work. It includes electricity, phone and internet, as well as depreciation. It is only valid for the period from March 2019 to 30 June 2022.
What You Can’t Claim
Even if some of these things are usually provided by your employer, these expenses are not claimable if you are providing them for yourself at home:
Toilet Paper (believe me, this is the first thing people ask about, so it tops the list!!!)
Coffee & Tea, and snacks such as biscuits
Household cleaning items
Stationery & subscriptions for online learning and education for your children, as well as desks and furniture, electronic devices, and other equipment.
Anything reimbursed or provided by your employer
Expenses when there is not a separate space for you to work – sitting at the kitchen table, or using a laptop in the lounge room are not valid WFH spaces.
This is a very simplified overview, and there are some nuances to claiming…if you need some assistance to work out where you stand, feel free to ask.