Working from home - what home office expenses are allowed

Whilst Covid-19 is largely under control in Australia, we have seen a significant change in how & where people perform their work duties. Many have continued to work from home full time or for part of their working week.

This has certainly prompted many taxpayers to consider working from home expenses for the first time as they may have not had any in the past, furniture, stationary, new technology, internet and phone expenses, just to name a few.

When it comes to claiming for those expenses at tax time it's important to get it right. As we now know the ATO have extended the 80 cents shortcut method up to 30 June 2021, this at first glance may seem like a great idea, but what many taxpayers don't realize is that if you choose this shortcut method, it actually excludes you specifically from claiming any other working from home expenses.

If you have other expenses to claim, such as furniture, stationary and tech purchases, Wifi & phone expenses, then you are generally better off using the general 52 cents per hour rate, as this will allow you to do just that.

Important to note is that for both methods you need to keep a diary of the hours worked at home. You also need to pay attention to how you apportion all other expenses, as they will most likely have a private component.

Note that costs such as rent, mortgage interest, rates etc are also excluded and cannot be claimed unless you are self employed and your home is the principal place of business.

Equipment purchases exceeding $300 per item need to be depreciated, this means they will be claimed over a number of years, their useful life, rather than claimed outright.

Still working from home and thinking of future purchases? Stock up on stationary and low cost equipment before 30 June to claim a tax deduction in your 2021 tax return.

If you are unsure of what you can claim or need further guidance in the lead up to the end of the financial year, get in touch, we'd be happy to assist.

As always, please note our no advice disclaimer:

Taxpayers should not act solely on the basis of the material contained in this post and any of our website/social media pages. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Posts are published as a helpful guide to taxpayers and for their private information.