New method for claiming expenses when working from home during COVID-19
With more and more people working from home to minimise their risk of exposure to the Coronavirus, the ATO have introduced a temporary simplified method (or shortcut method) of calculating additional running expenses incurred whilst employees are working from home. This shortcut method can be used instead of the existing methods for a limited time period.
The general rules to claim deductions for working from home still apply. This means you can claim deduction only when:
- You have actually spent the money and were not reimbursed by your employer;
- The expenses must be directly related to your assessable income;
- You must have a record for the expenses spent.
Shortcut method due to COVID-19
The applicable period for this method is only from 1 March to 30 September 2020 at this stage. The ATO may extend the period depending on circumstances. Employees cannot use this shortcut method to claim working from home expenses prior to 1 March 2020 and the pre-existing approaches for such claims, must be used prior to 1st March 2020.
Under the new shortcut method, employees can claim 80 cents for each hour working from home. This covers all deductible running expenses including:
- electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
- the decline in value and repair of capital items, such as home office furniture and furnishings
- cleaning expenses
- your phone costs, including the decline in value of the handset
- your internet costs
- computer consumables, such as printer ink
- the decline in value of a computer, laptop or similar device.
The ATO has advised that this new method is optional and if you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above.
You are required to keep a record of the number of hours you have worked from home as a result of COVID-19 such as timesheets, diary notes or rosters.
The note ‘COVID-hourly rate’ needs to be included in your tax return when you use the shortcut method to claim a deduction and lodge your 2019-20 tax return.
Expenses you cannot claim if you work from home only due to COVID-19:
- Occupancy expenses such as mortgage interest, rent and rates
- Amenities such as the cost of coffee, tea, milk and other general household items your employers may otherwise have provided you with at work.