The ATO has just announced a relaxation to the normal working from home rules and introduced a new 80 cent per hour fixed rate to cover ALL deductions.
There are now three ways you can choose to calculate your additional running expenses:
1. Shortcut method ─ claim a rate of 80 cents per work hour for all additional running expenses.
2. Fixed rate method ─ claim all of these:
- a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture,
- the work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery, and
- the work-related portion of the decline in value of a computer, laptop or similar device.
3. Actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
Under the SHORTCUT method, you can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:
- working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
- incurring additional deductible running expenses as a result of working from home.
You do not have to have a separate or dedicated area of your home set aside for working, such as a private study. This allows multiple people in each household to claim the new rate.
The shortcut method rate 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.
You do not have to incur all of these expenses, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.
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 must keep a record of the number of hours you have worked from home as a result of COVID-19. Examples are timesheets, diary notes or rosters.
The new method will cover the period starting 1 March 2020 till 30 June 2020, with the ATO open to extending the method depending on when work patters start to return to normal.
Tax agents or self-lodgers must include the note “COVID-hourly rate” in 2019–20 tax returns should they nominate to use the new method.
The new method will be supplementary to the fixed rate method and the actual cost of calculating running expenses, with taxpayers able to choose the appropriate method for their circumstances.
Claims before 1 March 2020 must be under the two standard approaches.
Bianca is an employee who works as a copywriter and editor. Bianca starts working from home on 16 March as a result of COVID-19 and replaces her face-to-face meetings with online video conferencing.
Bianca has just bought a new laptop, desk, chair and stationery. She also wants to claim some additional gas, electricity, phone and internet costs due to working from home.
Under the shortcut method, Bianca can now claim all her expenses under a rate of 80 cents per hour. All she needs is her timesheets.
Bianca can also decide to claim using existing working-from-home calculations. Under that method, she can claim the desk, chair, gas and electricity under the 52 cents per hour, but she would need to work out the decline in value of the laptop and calculate the work-related portion of the laptop, stationery, phone and internet.