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Working from home? A guide to claiming tax deductions

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ake the opportunity at the end of the financial year when you’re preparing your tax documents to check your credit score.

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If you have been working from home, chances are you can claim things like a portion of your energy and phone and internet bills, as well as other expenses, in your tax return this year.

But it’s really important to understand how the rules around tax deductions work to make sure you’re only claiming a deduction for the expenses you are allowed to under tax rules. There are three different methods you can use to claim your deductions.

Three methods

Here are the three different techniques you can use to claim your expenses, according to the Australian Taxation Office’s (ATO’s) rules.

1. The actual cost method.

As the name suggests, using this approach, you claim the real costs of your work-related expenses. You can also claim an amount for the depreciation of your home office furniture and other expenses such as smart devices, as long as these expenses cost less than $300.

Other costs you can claim a deduction for under the actual cost method include:

  • Internet access charges.
  • Phones calls.
  • Printer and printer cartridges.
  • Stationery.
  • Power.
  • Repairs and maintenance to your home office furniture and fittings.

As your home isn’t considered to be a place of business, you can’t claim non-work related expenses under this method. This includes rent, the interest you pay on your mortgage and the cost of any insurance premiums.

2. The fixed cost method

In contrast to the actual cost method, rather than claim the work-related proportion of your real costs, you claim a rate of 52 cents per hour for expenses such as gas and electricity. You also apply this same rate to depreciate other expenses related to your home office, such as the desk and chairs.

3. The shortcut method

The shortcut method is a new way of claiming deductions that was introduced this year for people who have been working from home since the start of the pandemic to claim work-related expenses as tax deductions. This method only applies from 1 March 2020 to 30 June 2020. It’s designed to allow people living in the same household, either as a family or in a share house, to all claim tax deductions for the expenses they have incurred doing their job from home that are related to their work.

During this period, each person in a household can claim expenses based on a rate of 80 cents an hour. All you need to do is keep a log of the hours you work.

This might seem like the easiest way to figure out your home office expenses for your tax return. But there is a risk you won’t claim as much as you’re entitled to, had you used either the fixed cost method or the actual cost method. Also be aware you can’t claim as a tax deduction the cost of things like office furniture, webcams and stationery.

Whichever method you choose, it’s a good idea to keep accurate records of all your actual expenses, plus the hours you have worked. That will allow you to choose the best method when you or your tax agent prepares your tax return.

What records do you need to keep?

No matter how you approach your tax, everyone needs to keep accurate records of their tax information, including receipts. Think about using software like Hubdoc, which links to Xero accounting software, to organise all your tax information.

Also take the opportunity at the end of the financial year when you’re preparing your tax documents to check your credit score. Go to ClearScore now for your free credit score check.

Tax can be a complex area. So it can be a good idea to use a registered tax agent to prepare your tax return. That helps ensure you’re claiming all your allowable expenses and also sticking to the rules.


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