Business owners and employees who are now working from home because of the COVID-19 outbreak will have access to a simplified way for claiming tax deductions, under a new ‘working from home shortcut’ outlined by the tax office today.
The Australian Taxation Office (ATO) will allow individuals to claim a rate of 80 cents per hour for all running expenses while working from home, instead of needing to calculate costs for specific running expenses.
The ATO is also removing the requirement to have a dedicated ‘work from home area’ in your premises to make claims, and said multiple people living in the same home can all make individual claims using the 80-cents-per hour rate.
Large numbers of Australian workplaces are now requiring all employees to work remotely and Assistant Tax Commissioner Karen Foat said the new arrangement is designed for those who may be working remotely for the first time.
“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,” she said in a statement.
The new arrangements only apply to expenses incurred after March 1, 2020, and individuals can still choose to make a working from home claim under existing arrangements that involve calculating all or part of their running expenses.
The ATO has not put an end date on the new arrangement but says it will review it in the 2020-2021 financial year, “as the COVID-19 situation progresses”.
Under existing arrangements, individuals can claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture. They are also able to make a claim for the work-related portion of their phone and internet expenses, computer consumables, stationery, and the decline in value of a computer, laptop or similar device.
Regardless of which method business operators or employees choose to make their working from home tax deduction claims, the ATO says it’s still important to note that claims can only be made for money the taxpayer has spent themselves. Claims must also be directly related to earning income, and there must be records to substantiate the claim.