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A 5 minute guide to home office deductions with the ATO

Jarrod Rogers CPA

5 April 2020

The coronavirus crisis has resulted in a lot more employees working from home. These are the main questions we’re getting from clients about home office deductions with the ATO and the main claims most people should be making.

Update 7 April 2020: What is the ATO work from home rate? 

Due to the increase in the number of people working from home, the ATO has released a new shortcut method for working out home office deductions. See here: https://www.ato.gov.au/General/COVID-19/Support-for-individuals-and-employees/Employees-working-from-home/

You can claim a flat rate of 80 cents per hour to cover:

  • Items covered by the fixed-rate (52c/hr method)
    • Light and power
    • The decline in value of office furniture
    • Cleaning

  • The following additional items
    • Phone costs (including the handset)
    • Internet
    • Computer consumables (including printer ink)
    • Stationery
    • The decline in value of your electronic device (laptop, desktop)

You must be performing your job from home, not just checking a few emails, for example. And you must have a separate or dedicated area, such as a study or spare room.  

Use the phrase “COVID-hourly rate” when filling out your tax return (the ATO now gets the notes you write in the work deductions section of your return.  Before 2019 they only knew the amount you were claiming.)

You don’t have to use the shortcut method. You can still use the existing methods (below). The shortcut is only available for expenses from 1 March 2020 to 30 June 2020.

Here is our update on YouTube covering the new changes.

This is the end of the update. The original blog is continued below.  The information is still current.

There is a video that goes into more detail and provides explanations.

The main four things you should be claiming are:

  • Running costs at the ATO fixed rate of 52 cents per hour. Keep a 30-day diary to prove this. Note: this was the original ATO work from home rate. Please see the April 2020 update above for more information. 
  • Internet: work use % only
  • Phone: work use % only
  • Office supplies: paper, ink, stationery
  • Computer accessories: keyboard, mouse, monitor, monitor stand – anything up to $300.
  • The decline in value of electronic devices: anything over $300 needs to be claimed over several years. Laptops, tablets, phones – 2 years; desktop computers – 4 years.

Don’t claim cleaning, utilities or office furniture as these are included in the fixed-rate method (52c per hour claim).

Can I claim rent/mortgage for working from home?

No.

There are rare circumstances where you can, but just working from home isn’t enough to claim what is called occupancy costs. The ATO has re-stated this position.

Can I claim rent/mortgage if I have no choice but to work from home?

Still no. The video has some more detail on this, and the ATO link above is quite clear.

Does working from home make my home subject to capital gains tax?

No.

If you can’t claim occupancy costs, you won’t pay CGT either.

How much of my phone/internet bill can I claim if I work from home?

How long is a piece of string? You have to apportion the use of your device between work and private use. That varies from person to person.

If you’re a tech addict and you’re on your phone all the time for social media or other apps then your private use will be higher than somebody who basically only has a phone because it’s a work requirement.

There is no set % – just make your best estimate.

What working from home deductions should I claim for a home office?

The following table covers the working from home deductions the ATO would accept.

Fixed-rate ? hr/wk x weeks worked x ATO rate 52c/hr
Internet Monthly cost x months worked x work use %
Phone Monthly cost x months worked x work use %
Office
supplies
Total cost x work use %  
Computer
accessories
< $300
Total cost x work use %  
Computer
equipment
>$300
Total cost x work use % Split over the
“effective life”

If my employer pays me to work from home can I still claim deductions?

No, if you are getting a reimbursement or if the employer pays the bill directly (e.g. they pay your phone and internet bill).

Yes, if you are getting an allowance. Just make sure you include the allowance in the income section of your tax return. If you do, you can still claim all your home office costs.

If you want some more detail on the rules, check out our video. For now, keep your receipts, log your hours and we can run through everything at tax time.

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