ATO Guidance on Deductibility of Costs of Working from Home

Guidance from the NTAA – Working from home expenses

The ATO has released new information on how to calculate working from home expenses including:

In Summary

During the period 1 March 2020 – 30 June 2020, there will be a temporary shortcut method to make it easier for individual taxpayers to claim deductions for all additional running expenses due to COVID-19. Claiming for home expenses prior to 1 March 2020, can only be claimed under existing arrangements (52 cents per work hour and actual cost method) compared to the claims made for the mentioned period (80 cents method, 52 cents method and actual cost).

If you are working from home due to COVID-19, individuals can claim a deduction for all deductible running expenses (except rent, interest and rates) based on a rate of 80 cents per hour, which is an alternative method to the actual cost method (requires more record keeping).

Note that you can only claim the 80 cents method if:

  • You are working from home to fulfill employment duties (does not include casual email checking and checking calls!) and,
  • You are incurring additional deductible running expenses if you are working from home

You do not have to have a dedicated or separate area of your home for working purposes (some of us have resorted to using our dining tables to work).

Multiple people living in the same household could claim under the 80 cents method (e.g. a couple living together can claim individually the expenses they have incurred while genuinely working from home.)

If you do choose the 80 cents method:

  • Separate claims of the above running expenses cannot be made.
  • The only requirement for each individual to claim the shortcut is to keep a record of the hours you worked at home during the March – June period
    • Examples are timesheets, diary notes or rosters.

When it comes to preparing the 2019-20FY tax return, you must include the note “COVID-hourly rate” in the tax return.

Varying your PAYG instalments

The ATO has released advice for taxpayers seeking to vary their PAYG instalments as a result of COVID-19. Read more here.

Alexander Laureti is the Principal and Managing Director of LMS Advisory. He holds a Bachelor’s degree in Accounting and Law, and he is a Fellow of the CPA (Certified Practising Accountants) and a Chartered Tax Advisor. Alexander has over 17 years of experience as an accountant in Public Practice.
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