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Working from home? What you can claim

From 1 March 2020 until at least 30 June 2020, special arrangements are in place to make it easier for individuals to claim expenses they have incurred while working from home during the COVID-19 pandemic.

If you have incurred work-related expenses and your employer has not reimbursed you, you can claim these expenses at a rate of 80 cents for each hour you work. To use this method, you will need a record of the hours you have worked, such as a diary or timesheet.

The claim covers all of your additional running expenses such as:

  • Electricity and gas
  • Decline in value and repair of capital items such as office furniture
  • Cleaning expenses
  • Phone and internet expenses
  • Stationery
  • Decline in value of computers and devices

For example, if you worked from home for 7 hours a day on the weekdays between 1 March and 30 June 2020, that’s 84 working days (in QLD) or 588 hours. Using the 80 cents COVID-hourly rate, you could claim $470.40. The rate covers all of your expenses, and you cannot claim individual items separately, such as office furniture or a computer.

NSW, QLD – 84 days, 588 hours = $470.40
SA, NT & VIC – 83 days, 581 hours = $464.80
ACT, TAS, WA – 82 days, 574 hours = $459.20

The COVID-hourly rate claim is per individual (not limited by household). That is, if you have multiple people working from home in your family, each person can claim the 80 cents per hour rate for the hours they have worked from home.

Using the COVID-hourly rate is optional and aimed at people who do not typically work from home. If you have a dedicated home office, or for those that generally operate their business from home, standard rules will apply.

The ATO appears to be taking the view that occupancy costs such as mortgage interest payments and rent cannot generally be claimed by those who are temporarily working from home as a result of COVID-19.

Home based businesses

In general, if your business is home-based, you should be able to claim both occupancy and running expenses. However, if you operate through a company or trust, the ATO’s preference is that there should be a rental agreement in place between the entity and the property owner.

If there is a valid rental contract, then the property owner should recognise the rental income and should then seek to claim a reasonable portion of their expenses against the rental income. The business entity should generally be able to claim a deduction for the rent that paid to the owner of the property.

Cents per kms change for work-related car expenses

The cents per kilometre method will increase from 1 July 2020 from 68 cents to 72 cents per kilometre. You can claim a maximum of 5,000 business kilometres can be per year per car under this method.

You still cannot claim travelling from home to work

Taxpayers could not claim the cost of travelling to and from work and working from home as a result of COVID-19. For example, if a taxpayer is working from home because of COVID-19 but needs to go to regular office one day per week, the home to work travel is still private travel and cannot be claimed.

 

If you would like to reduce the amount of tax you are paying, please give us a call. 90% of the time, we can legally reduce your tax liability. Contact Astute Advisory on 07 3012 6487 or hi@astuteadvisorygroup.com