ATO Announces New Short Cut Method for Claiming Home Office Expenses
The Australian Taxation Office (ATO) is announcing special arrangements this year due to COVID-19 to make it easier for people to claim deductions for working from home.
The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.
Multiple people living in the same house can claim this new rate. For example, a couple living together could each individually claim the 80 cents per hour rate. The requirement to have a dedicated work from home area has also been removed.
Assistant Commissioner Karen Foat said the new shortcut method will make it easier for those who are working from home for the first time.
“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” Ms Foat said,
“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.
“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim.”
This new shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.
Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.
The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses.
Working from home claims for 1 March to 30 June
There are three ways that you can choose to calculate your additional running expenses for the 1 March – 30 June period:
- claim a rate of 80 cents per work hour for all additional running expenses.
- claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device
- claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
The ATO is also reminding people that the three golden rules for deductions still apply. Taxpayers must have spent the money themselves and not have been reimbursed, the claim must be directly related to earning income, and there must be a record to substantiate the claim.
Date: 9 April 2020
Source: Australian Taxation Office
Working from home before 1 March 2020
Claims for working from home expenses prior to 1 March 2020 should be calculated using the existing approaches and are subject to the existing requirements.
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