Claiming cents-per-hour for your home office

Thanks to a number of lockdowns, many people had to work from home for the first time. Whether you have a fancy home office setup, or just work from your spare room in your pajamas, the way you complete your tax return will be affected. Part of this involved claiming cents-per-hour for the amount of time you worked from home. There are two ways you can do this — the Fixed Rate Method, and the Shortcut Method. 

Fixed Rate Method

Eligibility

If you’re eligible and have kept the right records, you can use the Fixed Rate Method to work out your deduction for working from home expenses. To be eligible, you must:


·      Incur additional running expenses as a result of working from home (e.g. working from home costs you money).

·      Have a dedicated work area, such as a home office that you use when you work from home.

·      Records that show the work-related portion of expenses not covered by the fixed rate per hour.

·      Records of the number of hours spent working at home for the whole income year.

Claiming

You can claim the fixed rate of 52 cents for each hour you worked from home. The rate includes the additional running expenses you incur for:


·      The decline in value of home office furniture and furnishings — for example, a desk.

·      Electricity and gas for heating, cooling and lighting.

·      Cleaning your home office.


You can also claim the work-related portion of the following expenses, which are not covered by the 52 cents per hour rate, if you incur these expenses as a result of working from home:


·      Phone, data and internet expenses, including the decline in value of the handset.

·      Computer consumables and stationery — such as printer ink.

·      Decline in value of depreciating assets other than home office furniture and furnishings used for work purposes — such as, computers and laptops.


You must use these things for work, not just have them at home. For example, if you may have a home landline and never use it for work, you wouldn’t be able to claim the expenses for this as a deduction. You can calculate your work from home deduction using the ATO’s Home Office Expenses Calculator.


Recordkeeping

Like everything with the ATO, you must keep records that show the work-related portion of your working-from-home expenses. These are:


·      A record of the number of actual hours you work from home during the income year, or a diary for a representative four-week period to show your usual pattern of working at home.


·      Receipts or other written evidence that shows the amount spent on expenses and depreciating assets you purchase.


·      Phone accounts identifying your work-related calls and private calls to work out your percentage of work-related use for a four-week representative period.



·      A diary that shows work-related internet use, and the percentage of the year you use your depreciating assets exclusively for work.



More on the four-week diary

The four-week diary is an extremely important tool for claiming your working-from-home expenses. If you record your hours worked from home during a four-week representative period, you can use it across the rest of the income year to work out the total number of hours you worked from home. However, if your work pattern changes you need to create a new record.


If you don't have a representative four-week period of your hours worked from home or your work-related use of your phone, internet and depreciating assets because they vary throughout the income year, you will need to keep records for the entire income year.


It’s best to plan ahead — use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year. This saves you scrambling through papers and receipts when it comes to tax time, as the majority of your records are sitting neatly within the app.

Shortcut Method

Because of COVID, the ATO introduced a shortcut method for working-from-home at a rate 0f 80 cents-per-hour. This goes from 1st March 2020 to 30th June 2021. If claiming this method, you cannot claim other expenses like internet usage or phone usage. 

We’re ready

With the tax deadline looming, the pressures of accurately claiming can become a little much. We’re ready to help you work out your working-from-home expenses. Contact us to get started.

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