Claim work from home expenses for financial year 2020/21 and increase your tax refund

Are you one of those many Aussies who have worked from home during this covid-19 pandemic?

If yes, then just be ready with your documentation as you may be entitled to substantiate your claims. Making inaccurate claims for home office expenses can lead to audit and you may end up paying a hefty fine to the Australian Taxation Office along with the back interest to be paid on the money you have been refunded.

Understanding these recommendations can help you maximize your tax refund, whilst avoiding the issues concerned with the Australian Taxation Office.

Claimable work from home expenses:

These days work from home is our “new normal” and we have no other option but to use our personal computer, phone, internet, power, equipment and furniture for work purposes. That means we can now claim more household running expenses in our tax return.

Home office expenses are usually divided into two types

Running expenses and occupancy expenses
If you are doing some of your work from home for a timely basis (like during covid), it’s expected that you are eligible to claim a running expense that includes equipment cost like computers, telephones, printers, desks and also a portion of energy costs that are been used in form of heating, lighting and cooling. For this particular claim all you need is just let us know your home working hours from each week and we will enter in on your tax return and it will calculate your deduction automatically.

What is not claimable?

  • According to the ATO, Occupancy Expenses mainly include rent or mortgage interest, council rates and land taxes which can only be claimed when your permanent place of work is your home so doesn’t apply for COVID-19.
  • General household items which are used for personal use like tea, coffee and tissue paper as they are not directly linked to the income you cannot claim the cost of these.
  • Equipment’s you buy for your children’s education like iPads and desks.

Despite the points discussed above, to simplify this blog only two methods of claiming work from home expenses are highlighted.

  • 52 Cents per hour method or the existing fixed rate method.
  • The 80 CENTS Per working hour method or shortcut method which is recently been introduced by the Australian Taxation Office in response to COVID-19.

Which method is best for you?

The running expenses fixed rate method:

You get to claim a flat deduction of 52 cents which is a fixed rate for every hour worked from home that covers things like incurred running costs from energy costs, cleaning costs to a decline in value of your furniture and fittings. After claiming your fixed rate, you can then claim your deductions for the work-related portions of all your bills like internet and phone along with the depreciation of equipment and devices such as phones, computers, laptops, monitors, headphones and other expenses separately.

This method could give you a higher tax refund but you need to ensure that you have an accurate paperwork on how much of your expenses can be allotted to work from home use.

The Shortcut Method:
This method is been introduced from march 1, 2020 onwards for claiming running expenses during covid-19 and it covers all your expenses and you can claim a tax deduction of 80 cents for each hour worked from home for the time period 1 July 2020 and 30 June 2021.

This method is usually beneficial when work from home expenses is covered by your employer as it covers everything from electricity and gas to phone and data but it can only be used for hours worked from home from March 1, 2020, if you were working from home before this date you have to use the above method to claim.

Still Unsure how to increase your refund and maximize your claim?

That is perfectly fine we are here to help! If you have any questions about tax deductions or any other taxation matter, our accounting professionals would love to speak with you. Please give QAATS a call on 1300072277 or contact us anytime via our website

Author: Farha Andleeb is a Master of Professional Accounting, passionate blogger and Content Writer at Digiweb Solutions.