Due to recent events, such as COVID-19 (coronavirus), bush fire and drought, you may be able to claim a deduction for expenses you incur relating to the work you're required to perform from home.
You may be able to claim:
- Running Expenses
- Occupancy Expenses
- Phone & Internet Expenses
Running Expenses
Running expenses can be claimed for those employees with a dedicated work area, including the following:
- Electricity expenses associated with heating, cooling and lighting the area at home which is being
used for work. - Cleaning costs for a dedicated work area.
- Phone and internet expenses.
- Computer consumables (e.g., printer paper and ink) and stationery.
- Depreciation of home office furniture and furnishings (e.g., an office desk and a chair).
- Depreciation of home office equipment (e.g., a computer and a printer).
From 1 March 2020 to 30 June 2020, deductible @ 80c per hour.
Prior to 1 March 2020, deductible @ 52c per hour.
This means that, under the 80 cents per hour method, separate claims cannot be made for any of the above running expenses (including depreciation of work-related furniture and equipment).
Furthermore, during the Covid-19 crisis, according to the ATO’s recent announcement, under the 80 cents per hour method:
- there is no requirement to have a separate or dedicated area at home set aside for working (e.g.,a private study);
- multiple people living in the same house could claim under this method (e.g., a couple living together could each individually claim running expenses they have incurred while genuinely working from home, based on the 80 cents per hour method); and
- an individual will only be required to keep a record of the number of hours worked from home as a result of the Coronavirus, during the above period. This record can include time sheets, diary entries/notes or even rosters.
Working from home running expenses that are incurred before 1 March 2020 (and/or incurred from this date where an individual does not use the 80 cents per hour method) must be claimed using existing claim arrangements. Broadly, these existing claim arrangements require:
• an analysis of specific running expenses incurred as a result of working from home; and
• more onerous record-keeping (e.g., the requirement to provide receipts and similar documents for expenses being claimed, as well as the requirement to maintain a time usage diary or similar record to show how often a home work area was used during the year for work purposes).
If you have a dedicated work area and don't wish to use the above cents per hour method using the Actual Method, you can claim additional running costs and the decline in value of office furniture used in the area for work purposes.
To calculate actual expenses for your dedicated work area, you can:
- keep a record of the number of actual hours you work from home during the income year
- keep a diary for a representative four-week period to show your usual pattern of working at home
- work out the decline in value of depreciating assets and
- keep receipts showing the amount you spent on the assets
- work out the percentage of the year you used those depreciating assets exclusively for work – you can claim a deduction for the proportion of the decline in value that reflects your work-related use of the depreciating assets
- work out the cost of your cleaning expenses by adding together your receipts and multiply it by the floor area of your dedicated work area (floor area of the dedicated work area divided by the whole area of the house as a percentage) – your claim should be apportioned for any
- private use of your home office
- use of the home office by other family members
- the cost per unit of power used – refer to your utility bill for this information
- the average units used per hour – this is the power consumption per kilowatt hour for each appliance, equipment or light used
- the total annual hours used for work-related purposes – refer to your record of hours worked or your diary for this information.work out the cost of your heating, cooling and lighting by working out the following
You must also take into account if any other members of your household use the home office and, if so, apportion your expenses accordingly.
To claim a deduction for an asset that cost $300 or more, you need to calculate the decline in value for both the period you:
- owned the assets during the income year
- used the assets for work-related purposes.
You can use the depreciation and capital allowances tool to calculate your deduction for the decline in value of equipment, furniture and furnishings that cost more than $300, use the depreciation and capital allowances tool to work this out.
If you don't have a dedicated work area, you should work out the actual cost of your heating, cooling and electricity expenses. You can do this by working out the cost of running each unit you used per hour and multiplying that by the hours you worked from home. The amount of the additional expense is generally small, especially if there are other people using the area at the same time you are working. In those circumstances, there is no additional cost for lighting, heating or cooling.
Occupancy Costs
Employees are generally not able to claim occupancy expenses, including:
- rent
- mortgage interest
- property insurance
- land taxes
- rates.
You can only claim the work-related proportion of your occupancy expenses in two very limited circumstances where:
- the space in the home is a place of business, and not suitable for domestic use – for example, a doctor or dentist surgery or a hairdresser studio in the home
- no other work location is provided to an employee by an employer and the employee is required to dedicate part of their home to their employer's business as an office – you can claim the portion of these costs that relate to a clearly identified place of business.
If you claim occupancy expenses, you don't qualify for the capital gains tax (CGT) main residence exemption for the part of your home that you use for work. If you use your home as a place of business there may be CGT implications when you sell it.
If you are eligible to claim occupancy expenses, you can work them out by calculating the:
Total expenses × floor area × percentage of year that part of your home was used exclusively for work
Telephone & Internet Costs
You can claim a deduction for the work-related proportion of your phone and internet expenses. You must have paid for these costs and have records to support your claims.
There are two ways to calculate your phone and internet expenses:
1. Claim up to $50 with Limited Documents:
If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyse your bills. The rates you can use to work out the cost for your work calls are:
- 25 cents for calls made from your landline
- 75 cents for calls made from your mobile
- 10 cents for text messages sent from your mobile.
You need to keep records for a 4 week representative period in each income year to claim a deduction of more than $50. These records include phone & internet bills.
2. Actual Expenses
If you have a phone or internet plan where you received an itemised bill, you need to determine your percentage of work use over a four-week representative period. You can then apply this to the full year.
You need to work out the percentage using a reasonable basis. This could include:
- the number of work calls made as a percentage of total calls
- the amount of time spent on work calls as a percentage of your total calls
- the time you spent, or data used for work purposes compared to your private usage and that of all members of your household.
If you have a bundled plan, you need to:
- apportion the cost of the plan between the services provided
- identify your work use for each service over a four-week representative period during the income year, which can then be applied to the whole year.
The same method should be used for non-itemised plans.
Records You Must Keep
If you're an employee who works from home, you must keep records such as:
- diary entries for a representative four-week period to show your usual pattern of working at home that show
- you worked from home and made work-related phone calls
- how you work out how much you used your equipment, home office and phone for work purposes over a representative four-week period
- receipts or other written evidence, including for depreciating assets you have purchased
- diary entries to record your small expenses ($10 or less) totalling no more than $200, or expenses for which you can't get any kind of evidence
- itemised phone and internet accounts (paper or electronic) from where you can identify work-related calls and internet use, or other written records, such as diary entries if you don't get an itemised bill.