Working from home during COVID? How to claim home office expenses

Posted on 23rd September 2020 by Christabelle Harris

One of the possible long-term impacts of the coronavirus is a fundamental change to how businesses operate with new research suggesting that up to fifty per cent of the workforce expect to continue to work remotely after the virus is contained.

If you are working from home, you may be able to claim a deduction for some of the expenses for your ‘office’ area. There are two parts to this, those employees working from home and businesses where their principal place of business is their home – effectively running their business from home. 

To claim a deduction, you must have spent the money (not been reimbursed by your employer), the expense must directly relate to your employment and you must keep a record to prove it. If you receive an allowance from your employer instead of a reimbursement you must include the allowance as income on your tax return and claim the corresponding expense as a deduction.  

Working from home during COVID-19

The ATO has acknowledged that many taxpayers may be working from home at this time and that tracking home office expenses may be a challenge. As a result, they are accepting a temporary simplified method of calculating additional running expenses from 1st March 2020 until (at least) 30th June 2020. Expenses not claimable under COVID-19 provision include occupancy expenses such as mortgage interest, rent or rates nor the cost of general household items such as tea, coffee, milk which your employer would otherwise provide.  

The simplified 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 fulfill your main duties, not just occasionally checking emails or taking calls 

• Incurring additional deductible running expenses, as a result of working from home:  
  • Electricity used for lighting, cooling, heating and running electronic items such as your computer, gas heating expenses
  • Depreciation and repair of capital items such as home office furniture & fittings 
  • Cleaning costs
  • Phone costs including depreciation of the handset
  • Internet expenses
  • Consumables such as printer ink and stationery
  • Depreciation of computer, laptop or similar device 

By using the simplified method you cannot claim further for the expenses listed above and you must keep a record (timesheet, diary notes or rosters) of the number of hours worked at home as a result of COVID-19. To claim the shortcut method on your tax return – include the note ‘COVID hourly rate’.

While simpler, the simplified method may not lead to the best tax outcome for all clients. We encourage anyone thinking of using the method to compare the likely result to the likely result and time commitment of recording actual expenses incurred.

If you have any queries, please do not hesitate to contact us on (08) 9316 7000.