A complete guide to WFH tax deductions


Working from home has been a reality for many of us over the last few months, given the coronavirus pandemic outbreak.

If you’re one of these people, you’ve probably been using your things at home to do your job – things that your employer would normally provide for you in the office.

But, did you know that when you do your tax return, you can claim some of this use as work related expenses? All those purchases and extra bills you had to pay because you’re working from home and not at the office, they’re tax deductible.

Of course, to claim any deduction, you must have spent money. For example, extra heating because you had to keep your home warm while you were working.

Where to start with tax deductions

If you want to claim tax deductions on this year’s return, you’ll need a proof of purchase. The Australian Tax Office (ATO) wants you to prove these expenses, so keeping a record of your costs is important.

Remember, the expense must be directly related to earning your income. So if you want to claim your Netflix account, then keep a good list of what work you’ve done that involves you watching Netflix. If you’re a TV critic, that Netflix bill is a totally relevant expense, you’ll likely be able to claim it.

Keep in mind, if your boss pays you an allowance to cover your costs from working at home, then you can’t claim your costs – unless they exceed the allowance provided by your employer. If the work from home allowance is more than your expense, it becomes income that you’ll pay tax on. You can’t have it both ways.

Now that we’ve covered the essentials, here’s an idea of what you can claim if you’re one of the millions of Australians working from home in 2020.

What can I claim?

Take a look at this for starters:

  • You can claim for electricity, heating, cooling, lighting, cleaning costs, phone, internet and home office equipment. If the cost is crucial to you doing your job properly from home and you have proof, then it should be claimable.
  • You can claim the full cost up to $300 for home office equipment, which includes computers, printers, phones, furniture and furnishings.
  • If you want to claim a much bigger amount, then you can use what’s called a depreciation deduction in your tax return. If that’s confusing then talk to an accountant or tax agent. Remember those appointments are tax deductible too.
What can’t I claim?

This begs the question: what can’t I claim?

  • You can’t claim your mortgage, your rent or your rates.
  • You can’t claim childcare or other expenses relating to your children or their education.
  • You also can’t claim coffee, tea or the bickies that you might have got for free at work. But you could claim the paper for your printer.
How do I claim?

You’ll make a claim when you fill out and submit your tax return to the ATO. Keeping track of these expenses can be challenging so from 1 March to 30 June 2020, the ATO has introduced a temporary shortcut method. It’s a simple way to calculate these expenses with minimal record keeping requirements. The ATO has said that it may extend this period, depending on when work patterns return to normal.

There are three ways you can claim these expenses. They are:

  1. The shortcut method. Here you simply claim a rate of 80 cents per work hour for all additional running expenses. Keep a timesheet. So if you work 10 hours a day, then you can claim $8 a day or $40 a week. Then multiply this $40 by the number of weeks you’re locked up and not at work.
  2. The fixed rate method. The ATO says “you can claim a deduction of 52 cents for each hour you work from home instead of recording all your actual expenses for heating, cooling, lighting, cleaning and the decline in value of your furniture. This rate is based on average energy costs and the value of simple furniture items used in the area where you’re working.
  3. The actual cost method. This involves a proportion of the actual cost. If you think your apartment or house usage has risen by 20% working from home, you can claim 20% of any heating bills, phone expenses etc.

If you want to know more about tax and what you can legitimately claim, then check out the ATO’s guide to deductions.

The deadline for lodging your tax return for the 1 July 2019 – 30 June 2020 financial year is 31 October 2020.



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