Archived April 2020 post. The temporary 80 cents-per-hour shortcut method described below applied to specific COVID-19 periods and has since been replaced – always check the ATO for the current working-from-home rules. If you work part or all of your job from home, you may be able to claim a deduction for the running costs of your home office.
The temporary shortcut method
Following the outbreak of coronavirus, the ATO announced arrangements to make it easier to claim. The temporary shortcut let people claim 80 cents per hour for all running expenses, rather than calculating specific costs, and removed the requirement to have a dedicated work area – so, for example, a couple both working from home could each claim the rate. It didn’t prevent people from claiming under the existing methods instead, and it couldn’t be used for periods before 1 March 2020.
Three ways to calculate (1 March to 30 June)
There were three options for that period: (1) claim 80 cents per work hour for all additional running expenses; (2) claim 52 cents per hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus the work-related portion of phone, internet, consumables, stationery and the decline in value of your device; or (3) claim the actual work-related portion of all running expenses, calculated on a reasonable basis. The ATO’s three golden rules still applied: you must have spent the money and not been reimbursed, it must relate directly to earning your income, and you must keep records to prove it.
Running expenses and record-keeping
Under the existing approach, a deduction could be claimed for home office running expenses such as electricity, gas and depreciation of office furniture, at actual cost or 52 cents per hour. As with a motor vehicle claim, a four-week diary or logbook was recommended to establish your pattern of working from home. No deduction applied where no additional costs were incurred (for example, working in a room where others are watching TV).
Phone, internet and equipment
You could claim the work-related portion of phone and internet costs, with a representative four-week period accepted as establishing your pattern of use for the year. Depreciation on equipment used partly for work – furniture, computers, printers, scanners, modems – could be apportioned based on a four-week diary record of income-producing versus private use.
Occupancy expenses
Occupancy expenses (rent, mortgage interest, water rates, repairs, house insurance) could be claimed only if the home was genuinely used as a place of business, apportioned on a floor-area basis. Factors indicating a place of business include an area clearly identifiable as such, not readily suitable for private use, used exclusively or almost exclusively for the business, and used regularly for client visits. If you work from home merely as a matter of convenience you can’t claim occupancy expenses, and it’s rare for an employee to be able to. Note that claiming occupancy expenses may affect your main-residence capital gains tax exemption if you later sell. For assistance, contact pmwPlus.