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Working from home? This is what you can claim this tax time

Just when you thought it was all over, parts of Australia are back under work from home orders with snap lockdowns. It’s obvious working from home is becoming more commonplace, so for tax purposes it’s important to know what you can claim for.

You can deduct the running expenses of your home office.
From the electricity you use for heating, cooling, and lighting to the depreciation of office furnishing, you can deduct the office related portions of these, providing you aren’t being reimbursed or compensated by your employer.

How much can you claim?
This depends on how the type of records you’ve kept throughout the year or how much time you want to spend calculating every last cent. There are three different methods you can use:
– The actual cost
– The shortcut method
– The fixed rate method

When you’re using your own personal phone and computer for work-related purposes, to claim the actual costs, you’ll need to figure out the percentage you use for personal use compared to office-related expenses. It can get quite complex to calculate the actual cost, so the ATO has introduced a special shortcut method for the period between 1 March 2020 to 30 June 2021. This allows you to claim 80 cents for each hour you worked from home. It may not give you the best tax refund, but it’s the easiest and fastest way to work it out. All you need is to keep a record of your hours working from home and a 4-week diary journaling your normal pattern of work hours.

By using the shortcut method, the flat rate covers everything, including depreciation on furnishings, office equipment, heating, cooling, and phone.

You can elect to use the fixed rate method to calculate your office running expenses, which drops the hourly claim rate to 52 cents per hour worked from home, but allows you to claim on depreciation, asset purchases and even office cleaning.

Please note: if you are claiming for cleaning costs, it must be related to the office-portion of your home.

Keep in mind, this year is not the year to try and sneak through the claims you are not technically entitled to. For example, if you’ve been working from home and claim laundry costs for uniforms, you can expect it’s going to raise a few eyebrows and perhaps gain some unwanted attention from the ATO.

Other expenses you can claim if you are using the fixed rate and actual cost method to claim

Continued professional development

If you have furthered your current career by undertaking study that results in a formal qualification, then you will be able to claim a portion of your course fees, textbooks and other study related expenses. For example, if you are a marketing professional and undertake upskilling in social media to grow your skills, this would be covered. But if you are a marketing professional who wants to become a fashion photographer, then this would not be covered. The self-education must provide you with new skills related to your current career.

Home office furnishing and equipment

Provided you are using the fixed rate or actual cost method to calculate your work from home expenses you can deduct the costs of your home-office furnishing and equipment. You are entitled to claim for the decline in value for any items over $300 or the full value up to $300.

What you can and can’t claim can be confusing for employees who work from home. To ensure you’re fully entitled, make an appointment with a certified taxation specialist. They will be able to help you maximise your tax refund.

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