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What you can claim on tax if you have to work from home during coronavirus

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As businesses around Australia respond to the threat of a COVID-19 outbreak, more and more are taking a safety-first approach and moving some or all of their staff to working remotely.

For people who are used to working only at their workplace they may not be aware of the possible tax deductions they may be entitled to when working from home.

There are a number of deductions available depending on your specific circumstances.

working from home coronavirus tax deductions

What items can you claim?

There are two main deductions that will likely apply:

Office equipment

If you have to buy any office items out of your own pocket (and you're not reimbursed), you can usually claim a deduction for these items. This could include an office chair, desk, computer, printer, monitor etc. Keep in mind any item that you will use for both work and personal use need to be apportioned. Any item over $300 needs to be depreciated - you can't claim the costs in full.

Internet and mobile phone expenses

If you're using your personal phone and internet, keep a diary noting just how much of each item you used as you can then claim a proportion of your monthly bill as a deduction.

Don't go overboard here! If your employer wouldn't be willing to confirm to the ATO that an item is a requirement for you to do your job, then you probably can't claim it.

What about home office expenses?

The other deduction that you may be entitled to claim are home office expenses. These are costs associated with working from home such as electricity, water, heating, and loan interest. There are two ways to claim home office expenses:

Running costs

This is the easiest way to claim, especially if you're working from home temporarily. Keep a diary of exactly how many hours you work from home and then claim at a rate of $0.45 per hour.

Occupancy costs

This method involves you calculating a specific amount for each expense you have based on the size of your home office vs the rest of your house. For example, if your office is 15m2 and your home is 100m2 then for the period you work from home, you can claim 15% of items such as electricity, water, heating, rent, mortgage interest and so on.

Be sure to check with your tax agent before claiming home office expenses using the occupancy costs method. It can be tricky and is only available if you have a dedicated office in your home (the dining room table doesn't count). In addition, if you include mortgage interest as part of your claim your property would be subject to capital gains tax when you sell it down the track.

Important notes and tips

There are some very important points you need to be aware of before making any claim:

  • First and foremost, if possible have your employer cover the costs for you. That way you get 100% of any expense back in your pocket rather than your marginal tax rate which for most people equals about 20-35%.
  • Each person's circumstances are different. If you're not sure whether you fit the criteria for a certain work from home deduction, always ask your tax agent for advice.
  • If you do purchase an item to assist with working from home, it must be necessary to do your job. An office worker might need to buy an office chair to work from home, but it's not an excuse to go out and buy a new coffee machine to keep you caffeinated throughout the day.
  • If you are provided any equipment by your employer to work from home (e.g a laptop or monitor) those items cannot be claimed on your return.

We're cutting through the confusion to help you manage your money during the coronavirus outbreak. Click here for more on how COVID-19 could affect your job, budget, super and investments.

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Liz Russell is senior tax manager at Etax.com.au, Australia's largest online tax return service. Liz has been with Etax since it launched in 1998 and brings more than 40 years' tax experience to the table. Her expertise lies within complex individual tax returns and ensuring all of her clients walk away with the best possible refund while staying within ATO rules and regulations.
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