Changes to Home Offices 2020

A new short cut method for claiming home office expenses.

ATO announces short cut method for claiming home office running costs

The Australian Taxation Office (ATO) has introduced a new simplified method for claiming additional running expenses incurred from working at home due to the Coronavirus pandemic.

The new method allows individuals to claim a deduction for all running expenses incurred during the period 1 March 2020 to 30 June 2020 based on a flat rate of 80 cents for each hour an individual carries out genuine work activities at home (this is up from 52 cents under the Commissioner’s previous allowance).

The 80 cents per hour method is designed to cover all deductible running expenses associated with working from home and incurred from 1 March 2020 to 30 June 2020, including the following:

  • Electricity expenses 
  • Cleaning costs for a work area.
  • Phone and internet expenses.
  • Computer consumables (e.g., printer paper and ink) and stationery.
  • Depreciation of home office furniture and furnishings (e.g., an office desk and a chair).
  • Depreciation of home office equipment (e.g., a computer and a printer).

Be careful as since the 80 cents per hour method includes all expenses, you cannot make separate claims for the purchase of work-related equipment.

As a result, using the 80 cents per hour method could see you claiming a lower amount that you might otherwise be able to claim under the existing rules.

For example, if you purchased an additional computer monitor under $300 it would be deductible outright under the existing home office claims but not claimable under the simplified 80 cents per hour method.

As an example:

Michael worked from home for the period 1 March 2020 to 30 June 2020. During this period he performed work duties for on average 8 hours per day at 5 days per week. He would be entitled to claim 8hrs x 5days x 13wks @ 80 cents = $416

However if Michael claimed under the existing rules and had purchased a printer for $200 during this period his deductions would be:

8hrs x 5days x 13wks @ 52 cents = $270 + $200 = $470

Working from home running expenses that are incurred before 1 March 2020 (and/or incurred from this date where an individual does not use the 80 cents per hour method) must be claimed using existing claim arrangements.

Important tip for the simplified method is there are no requirements to have a separate or dedicated area at home set aside for work duties and multiple people living in the house could claim under this method.

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