Working from home: What you can and can’t claim

Claim work from home deduction

The way we work is changing, and working from home has become the new normal. Despite the reopening of workplaces, airports, and restaurants worldwide, some companies have entirely adapted the work from home model. 

You might be paying office expenses from your pocket since you are working from home. What’s worse is that you have to pay taxes on items you bought for your work. Most Australians are in the dark about work from home claim policies. Therefore, we will share all the information you need about work from home claims in this blog post. So keep reading to save hundreds of dollars on tax returns this year. 

What Can You Claim As Work From Home Expense

If your home has become your workspace, there have a dedicated area where you work. You can claim running and occupancy expenses during work from home. If you carry your work or business from an office and take extra work home, you cannot claim occupancy expenses. Here is everything you can claim during work from home.

Heating, Cooling, and Lighting

During work from home, you need an appropriate temperature to stay focused. During the winters, you might run your heater for longer periods than usual, and during summers, your AC might be on 24/7. You also need light to see what you are doing. Hence, you can claim a portion of your utility expense related to the time you spend working from home. However, you cannot claim for periods when the office space isn’t active or not being used.

Home Office Equipment

You might be overusing your computer, printer, and other home office equipment during COVID-19 work from home. This heavy usage speeds up depreciation and shortens the life of your assets. Plus, computer consumables like printer ink, paper and stationery items also dry up faster during work from home.

You can claim a full cost for these items if they cost more than $300. Plus, you can even claim for depreciation for items costing $300 or more. If you are self-employed, you can write off equipment immediately, irrespective of the cost.

Work-Related Phone Calls

You can claim a portion of your work-related phone calls. However, you have to prove that you made additional calls due to work from home, and that these calls were related to your work. Keep proof of calls and messages to show if asked.

Depreciation on Home Office Furniture

If you had to revamp your home furniture to make it more suitable for work, you could claim for its depreciation. However, you need to prove that the new furniture was for your office work. This type of furniture includes office desk, chairs, and other fixtures that come along.

How to Claim Home Office Deductions?

There are two methods to claim work from home deduction. One is to record every transaction, and the other is to claim an hourly rate. You can find more details on work from home deductions you can make here.

Receipts or Written Evidence

When making a home office claim, ensure that you can back everything with proper receipts or documentation. This includes the following.

  • Receipts of equipment and items you have purchased for office work.
  • Entries you make to record small purchases (less than $10) shouldn’t be more than $200.
  • Entries explaining how much time you spend in your home office. This information is used when claiming utility bills.
  • List down phone accounts that you identify as work-related calls.

Australian Office Rate Per Hour Tax

You can follow the Australia office rate per hour for your claims as an alternative to keeping records. The amount determined by the Australian government is 52 cents per hour for every hour you spend in the office area of your home. Under this method, you cannot claim for individual items like office equipment expenses. Following are the costs that are non-deductable as part of your home office expense.

  • Mortgage or interest cost
  • Rates and taxes
  • Depreciation on home and home furniture

The Australian Tax Office has come up with an easier alternative to claiming tax returns. You can claim a deduction of $0.08 per documented working hour from 1st March 2020 to 30th June 2021. But under this method, you cannot claim any other expenses related to work from home.

Conclusion

COVID19 has changed the way we work, and most companies have adapted to work-from-home methods. Employees working from home saved companies millions of dollars in employee-related expenses, including utility bills. On the other hand, the employee can claim work from home benefits from the Australian government. We hope the methods mentioned above can help you claim deductibles from your tax return and you get back what’s rightfully yours.

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