Australian business owners and employees will have access to the shortcut method for claiming working-from-home tax deductions until the end of this financial year.
The Australian Taxation Office introduced the simplified method for claiming deductions in April, as the COVID-19 pandemic caused most Australian employees to move to remote working.
The method allows taxpayers to claim a flat rate of 80 cents per hour for all running expenses while they work from home, instead of calculating costs for specific running expenses.
In October, the ATO extended the use of the shortcut method until the end of December 2020, and a further extension has now been applied, until June 30, 2021.
In updated advice on the ATO website in December, the tax office said it may extend the time period even further “depending on when work patterns return to normal”.
As it stands, the shortcut method can be used to calculate working from home expenses for the following time periods:
- March 1 to June 30, 2020, for 2019-20 tax returns; and
- July 1 to June 30, 2021, for 2020-21 tax returns.
Individuals can use the shortcut method for claims relating to phone and internet expenses, the decline in value of equipment and furniture, and costs associated with electricity and gas for heating, cooling and lighting.
The method is not mandatory and 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 hour to be claimed for heating, cooling, lighting, cleaning and the decline in value of office furniture, as well as the work-related portion of other costs, such as phone and internet expenses.
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 for the relevant time period.
However, the tax office recommends keeping receipts in case you later need to combine claiming methods after December 2020.
More information about the different methods for calculating working from home deductions is available on the ATO website here.