In April 2020 the ATO first announced a new method for claiming home office expenses due to the coronavirus pandemic. The new “shortcut method” allows you to claim a deduction of 80 cents for each hour you worked from home for the periods between 1 March 2020 to 30 June 2020, and from 1 July 2020 to 30 June 2021.
The shortcut method rate covers all running expenses, including:
- Electricity for lighting, heating & cooling and running electronic items
- Phone and internet costs
- Computer consumables e.g. printer ink and stationery
- The decline in value of home office furnishings and electronic equipment
- Cleaning expenses
The benefit of the shortcut method is that you do not need to have a dedicated working area in your home, which is a requirement for using the fixed rate method. It is especially useful for people who are working from shared spaces in their home, and multiple people living in the same home can all make claims using the 80c rate.
Additionally the method is very simple to claim, as all you need is a record of the hours you have worked from home. The record can be in the form of a timesheet, roster or diary.
The shortcut method covers all running expenses, so you are unable to claim any other expenses for working from home for that period. If you have large phone or internet expenses, or have purchased a computer for working from home, this likely means that you would be eligible for a larger deduction using another method.
Home office claims can still be made under the existing methods, and you can choose to use the method that allows you the best deduction.
The fixed rate method involves claiming a deduction of 52 cents per hour worked from home, and this rate covers electricity, decline in value and repairs of furnishings. You will separately calculate your work-related use for your phone and internet expenses, computer consumables and depreciation of electronic equipment.
See here for more information from the ATO website on the available methods and record keeping requirements for your home office claim.
Other related blogs:
Home office vs place of business
Wages during lockdown
Author: Danielle Pomersbach
Email: danielle@faj.com.au
