Home office expenses

With all the time many of us have spent working from home in the past 12 months, it’s likely you may have expenses you can claim. However, with this being a focus for the ATO it’s important to ensure you are clear on what you can and can’t claim. In addition, there are different methods for calculating deductions. Along with the usual methods, the ATO has introduced the ‘shortcut method’ for the period of the pandemic. Select whichever is most appropriate for your personal situation.

Even if you are an employee, if you work from home you may be able to claim deductions related to the cost of working from your home. These include items such as additional electrical, phone, and internet expenses.

Among the things you can’t claim as deductions:

  • Anything your employer pays for or reimburses you for;
  • Any decline in value of items your employer provided;
  • General household items your employer provides at work (such as snacks);
  • Items related to your children and their education; and
  • Occupancy expenses such as rent and mortgage (employees typically can’t claim these).

If you are working from home as an employee, you can use one of three methods for calculating your expenses.

The shortcut method allows you to claim 80 cents per hour for every hour you worked from home. You can only use this method to claim expenses from 1 March 2020 through the 2020-2021 income year.

The fixed rate method allows you to claim a deduction for additional running expenses for working from home. In this case, you can claim 52 cents for each hour you worked from home, but you must have a dedicated work area and keep records of time worked, either throughout the year or over a representative four-week period. The fixed rate method also does not include phone or internet expenses, computer consumables or the decline in the value of equipment.

The actual cost method allows you to work out the deduction based on the actual costs incurred working from home. This includes electricity and gas, phone and internet, cleaning and consumables. The exact expenses you can deduct varies, depending on whether you have a dedicated work area.

If you need assistance with complex tax matters, please contact our team.