Working from home – or WFH as most of us now refer to it – has become the norm for more Australians than not in the last year. Which begs the question: What can I legitimately claim on my tax return?
Gerry Incollingo, managing director of LCI Partners gives us the heads up on what you can claim when working from home and what might get you in trouble with the tax man.
Since 2020, more people are working remotely from home than ever before. Despite some normality being restored and workers starting to return to the office, ABC news reported, three quarters of Australians believe the ideal working situation is a mixture of working from home and in-person.
Coronavirus has seen changes to what you can claim if you are working from home and include (but are not limited to):
1) Claim a portion of your home office
Depending on your individual circumstances, there are three ways of calculating work from home expenses.
The Actual Cost
When you work from home you can deduct a portion of your heating, cooling, phone, internet and wear on office furnishings. Calculations may be time consuming and accurate records need to be for the entire financial year.
- The Shortcut Method
For every hour you work from home you are entitled to claim 80 cents for the period between 1 March 2020 to 30 June 2021. The shortcut method is preferred for those who find they have additional running expenses or it’s more difficult to calculate the actual cost. You must have kept records to show your hours.
2) The Fixed rate method
Outside of the dates 1 March 2020 to 30 June 2021, the fixed rate of 52 cents per hour applies when working from home. To be eligible to claim this, you must be able to keep a diary for a minimum of 4-weeks demonstrating your usual pattern of working hours, as well as records of the actual hours you worked remotely.Please note: It is also worth noting if you use the shortcut method to calculate your deductions, you are unable to claim for depreciating equipment or expenses your employer reimburses you for.
Any continued professional development that relates directly to your chosen field and results in a formal qualification is tax deductible. For example, if you are a hairdresser, a fashion photographer course wouldn’t be covered. But if you were to complete a formal qualification as a colour technician, which leads to an increase in clients, then this is tax deductible. Keep all receipts of course fees, textbooks, stationary and travel expenses.
Cleaning your office space
You can claim on the cleaning of your dedicated office space. Whether it’s a spray and wipe job or a professional cleaner, you can only claim to clean your workspace portion, not your entire home.
Home office equipment
You can claim on home office equipment such as laptops, computers, printers, phones, and furnishings such as office desks, chairs and lamps. Under the fixed rate method, you can claim for decline in value for any items over $300 or the full value up to $300.
For more information about tax entitlements for employees who work from home visit the ATO website or make an appointment with a well reputed taxation accountant to make sure you are getting the correct entitlements working from home.