Home Office Expenses, What you can and can’t claim

So your boss is making you do work at home, and your keen to know what you can claim on this years tax.

Here is a complete guide to what you need to know.

 

If your home is not a place of business, then your claims are restricted to running expenses only. This may include a portion of your heating, lighting, and telephone, electricity consumption, internet expenses and depreciation of equipment. This guide is not designed for people running a business from home, although many of the same things do apply. We suggest you contact us for more detailed information.

 

Keep a log book or diary.           

Download our PDF version HERE for free.                                             

There are basically 2 methods of claiming.

One uses rates as determined by the ATO, the other claims a percentage of the actual costs.

Hourly rate method of estimating home office deduction

New: Shortcut rate for all costs, starting 1 March 2020

80 cents per hour.

 

The optional 80 cents rate method covers all costs associated with working from home, including heating and cooling, electricity, mobile phone, internet and depreciation of office equipment.

This means you claim 80 cents for every hour you work from home and can’t claim anything else.

 

But if you claim the 52 cents per hour claim method, it covers electricity, gas and depreciation, but you will need to prove any other claims for phone, internet etc.

Under the 80 cents method, the only records required to be kept are time records, download our logbook showing the hours worked from home, and there is no requirement for a dedicated work area.

Claims for periods before 1 March 2020 must still be worked out as before.

52 cents per hour for the year to 30 June 2019 and for 2019-20.

If the diary basis of claim is used (i.e. the pattern of work-related usage has been established), the Tax Office accepts a fixed rate of 52 cents per hour to cover electricity and gas (for heating, lighting and cooling) and the depreciation of office furniture applicable for the year ending 30 June 2019 onwards.

The rate continues to be applicable for 2019-20 if the 80 cent short-cut method is not selected.

 

 

Prior Year Hourly rates:

 

  • From 1 July 2018 – the rate is 52 cents per hour
  • Years from 1 July 2014 to 30 June 2018 – the rate is 45 cents per hour
  • Years from 1 July 2010 to 30 June 2014 – the rate is 34 cents per hour
  • Years from 1 July 2004 to 30 June 2010 – the rate is 26 cents per hour
  • Years from 1 July 2001 to 30 June 2004 – the rate is 20 cents per hour

 

 

Working from home during COVID-19 update from ATO

 

Phone and internet expenses

Mobile and home phone and internet expenses can be claimed provided there is sufficient evidence to support the requirement for the work-related usage and a reasonable basis of apportionment is used for calculating the work-related use.

Apportioned business internet usage can be estimated based on records of actual usage maintained for the year or in stable usage circumstances a representative 4 week period will suffice.

Calculations are expected to take into account such factors as bundled services, personal usage, periods of annual leave and use by other persons.

Claiming for telephone up to $50

For incidental work use of a taxpayer’s telephone where the claim is not more than $50, the ATO accepts claims based on the following estimates:

  • work calls from a landline: 25 cents per call
  • work calls from a mobile: 75 cents per call
  • work-related text messages sent from a mobile: 10 cents per text

 

Claiming more than $50

 

To establish a claim of more than $50, a 4-week representative period of expenditure can be used. Acceptable records include diary entries, electronic records, and bills, along with some evidence from the employer that work from home or work-related calls are expected. (Ideally a letter from your employer goes a long way. We recommend to get it now, before your circumstances change).

 

How to prove your claims

To substantiate your claim,

  • keep records which support the actual costs incurred, and which indicate the correct non-deductible apportionment
  • keep a representative four-week diary to establish a pattern of usage. If there is no regular pattern, then records of the duration and purpose of each occasion would need to be kept.
  • Download our free record keeping diary 

 

A claim is not allowed where there are no additional costs incurred or the activities are incidental.

Home Office Expenses,      What you can and can’t claim
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