EOFY basics: How COVID-19 could impact your tax return

Tax tips for working from home

If you’re working from home for the first time due to COVID-19, you may have a few questions about how to prepare for your tax return and claim expenses incurred from working at home.

From 1 March 2020 until at least 30 June 2020, the Australian Taxation Office is allowing employees to calculate additional running expenses using a temporary simplified method (or shortcut method).This period may be extended depending on when work patterns return to normal, so it’s important that you stay up to date with these changes.

Looking for an easy guide that covers all the basics? You’ve come to the right place!

To claim, or not to claim?

It’s important to have a basic understanding of the expenses you can and cannot claim. If you work from home, you’ll be able to make a claim on additional running expenses you incur, including:

If you are working from home only due to COVID-19, you cannot claim:

  • occupancy expenses (ie, mortgage interest, rent and rates)
  • the cost of general household items (ie coffee, tea and milk)

Calculating expenses: three methods

We’ve simplified the three methods that the ATO has outlined to calculate additional running expenses this year.

1. Shortcut method
Claim 80 cents per work hour for all additional running expenses. The shortcut method rate covers all deductible running expenses.

2. Fixed rate method
Claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, work-related costs of phone and internet expenses, computer consumables and stationery, and the work-related portion of the decline in value of a computer, laptop or similar device.

3. Actual cost method
Claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

Get your documents together

Have all your necessary documents* at the ready – these may include physical or digital receipts and other forms of proof of purchase and time sheets for your time working from home. This will allow you to easily backtrack your expenses and calculate time spent working so that filling in your tax return form is a breeze.

*If you use the shortcut method, you only need to keep a record of the hours you worked at home. If you use the fixed rate or actual cost methods, you must keep a record of the number of hours you worked from home plus all records of your expenses.

Get expert help

Speak to a registered tax professional for more information on your individual situation. For more information about working from home and your tax return, visit the ATO website.

Looking to refresh your home office this tax time? Shop the EOFY sale today.

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