What things do I need in order to have tax deductions at the end of financial year due to working at home because of Covid-19? Will it just adjust with my transport costs, or if I had to do some arrangements at home would that be beneficial?
Hannah, Claremont, WA
Top answer provided by:
With many Australians forced to work from home due to COVID-19, I am sure there will be a substantial increase in bill shock when Electricity and Gas bills come in the mail. It is reasonable to expect that taxpayers receive some compensation for these unexpected costs.
In order to claim a tax deduction for working-from-home expenses, taxpayers would ordinarily be required to go through the tedious process of keeping a logbook, having a dedicated work-from-home area and apportion use between what is personal and what is work related. You must do so on a ‘reasonable basis’, whatever that means…
Fortunately, considering the COVID-19 pandemic, the Australian Taxation Office (ATO) has introduced a simple ‘shortcut method’ which will allow taxpayers to claim 80 cents per hour for all their running expenses from 1 March to 30 June 2020.
In this case, all you need to do is keep a record of the hours you worked from home as evidence of your claim. This could be a timesheet, roster, diary or similar that detail hours worked.
You can calculate your deduction for additional running expenses using the shortcut method, with this formula:
- Total number of hours worked from home between 1 March and 30 June 2020 × 80 cents.
We would expect the shortcut method to flow into the 2021 Financial Year if the Australian Government continues to encourage taxpayers to work from home.
You would need to use other methods for hours worked prior to 1 March, keeping a record of the number or hours you worked from home along with records of your expenses.
I hope this helps and makes life much easier at tax time!
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.