ATO extends ‘shortcut’ method for claiming work from home tax deductions

working from home

Australians working from home during the coronavirus pandemic will be able to continue to use a simplified way for claiming tax deductions, after the Australian Taxation Office (ATO) extended its shortcut method for making work-from-home claims to December 31, 2020. 

First announced in April, the method allows 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 extension of the simplified arrangements was welcomed by Assistant Treasurer Michael Sukkar, who said on Thursday the method is “making it easier for many Australians who are continuing to work from home due to COVID-19 when it comes to accurately completing their tax return”. 

The shortcut method can cover clams such as phone and internet expenses, the decline in value of equipment and furniture, and costs associated with electricity and gas for heating, cooling and lighting. 

Individuals do not need to have a dedicated ‘work-from-home area’ in their home to make claims using this method, and multiple people living in the same home can all make individual claims using the 80-cents-per-hour rule.

To use this method, individuals only need to keep a record of the hours they’ve worked at home for the periods March 1 to June 30 for the 2019-20 financial year, and July 1 to December 31 for the 2020-21 financial year.

However, the tax office recommends keeping receipts in case you later need to combine claiming methods after December 2020. 

Claims can continue to be made under existing arrangements, including the actual cost method, or the fixed-rate method, which allows for 52 cents per hours to be claimed for heating, cooling, lighting, cleaning and the declines in value of office furniture, as well as the work-related portion of other costs, such as phone and internet expenses. 

Regardless of the method used to make claims, the ATO says it’s important to remember 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 claims. 

More information about the methods for calculating working from home tax deductions is available from the ATO website here

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