On 7 March 2020, the ATO announced a special shortcut method for claiming deductions for working from home during the COVID-19 period.
This method generally allows a deduction of 80 cents for each hour worked from home during the period 1 March 2020 – 30 June 2020.
For example, assume that on a regular working week of 5 days you worked from home 7.5 hours each day. You’ll be able to claim $30 (5 x 7.5 x $0.80) in working from home deductions for that week. Over the entire 4-month period, the total deduction may be approximately $480, depending on the number of days and hours you actually worked from home.
To claim the shortcut method, the taxpayer must have been working from home to fulfil employment duties, not just minimal tasks such as checking emails occasionally, and have been incurring additional expenses (e.g., electricity, cooling/heating, depreciation on capital items, cleaning expenses, internet/phone costs, etc.) due to working from home.
Unlike ordinary working from home claims, this shortcut method does not require a separate or dedicated area being set-aside for working. The only record keeping required to claim this deduction is the hours worked from home (e.g., timesheets or diary notes).
The 30 June 2020 income tax return will include a special item to claim working from home deductions under the shortcut method.
It should be noted that working from home expenses incurred before 1 March 2020 (and/or incurred from this date where an you do not wish to use the 80 cents per hour method) can only be claimed using the existing claim methods. These methods require an analysis of specific expenses incurred as a result of working from home and have more onerous record-keeping requirements. The existing claim methods may be more beneficial where you have incurred significant expenses (for which you have records) on depreciation (e.g., laptops, printers, etc), office supplies (e.g., paper, printer cartridges, etc.) and other items.
If you have any questions regarding the above, please contact our Tax Director Raffi Tenenbaum or your Prosperity adviser.