The volume of people working from home due to COVID-19 has
shone a new light on home office expenses and deductions.
With more people working from
home than ever, the ATO is accepting
a temporary simplified method (or
shortcut method) of calculating
additional running expenses from
1 March 2020 until at least 30 June
2020. This period may be extended,
depending on when work patterns
return to normal.
Under the shortcut method,
taxpayers can claim a deduction of
80 cents for each hour worked from
home due to COVID-19, provided the
taxpayer:
- is working from home to fulfil
employment duties and not just
carrying out minimal tasks, such
as occasionally checking emails or
taking calls, and
- is incurring additional deductible
running expenses as a result of
working from home.
The taxpayer does not have to
set aside a separate or dedicated
area, such as a private study, of their
home for working. However, having
a dedicated space makes it easier
to show that additional running
expenses have been incurred.
The shortcut method rate covers
all deductible running expenses,
including:
- electricity for lighting, cooling or
heating and running electronic items
used for work, and gas heating
expenses
- the decline in value and repair of
capital items, such as home office
furniture and furnishings
- cleaning expenses
- phone costs, including the decline in
value of the handset
- internet costs
- computer consumables, such as
printer ink
- stationery, and
- the decline in value of a computer,
laptop or similar device.
The taxpayer does not need to have
incurred all of these expenses, but
they must have incurred additional
expenses in some of those categories
as a result of working from home due
to COVID-19.
Where the shortcut method is used,
the taxpayer cannot claim a further
deduction for any of the expenses
listed earlier.
Records — timesheets, diary notes
or rosters — must be kept of the
number of hours worked from home
as a result of COVID-19.
Where taxpayers use the shortcut
method to claim a deduction, the note
“COVID-hourly rate” must be included
in the taxpayer’s 2019-20 tax return.
Where the taxpayer was working
from home to some extent prior to
COVID-19 and claiming home office
expenses under the standard method
set out in the following diagram, the
taxpayer can transition to the shortcut method for the period 1 March
2020 to 30 June 2020 (or longer if this
period is extended). Once the shortcut method ceases, the taxpayer can
revert to their previous method of
determining home office expenses.