You’re Supplying the Home Office, Now Get the Government Pay for It
During ordinary times, the Australian government imposes strict requirements on whether and when a person can claim deductions for a home office. But we are not living in ordinary times, and the Australian Taxation Office (ATO) has recently announced changes to the tax code that will allow employees that have been working from home due to the COVID-19 pandemic to reclaim some of their operating expenses through tax deductions.
Under the new rules, Australians will be permitted to claim a rate of 80 cents per hour for all running expenses, along with other expenses and equipment that they have purchased to continue working during the pandemic.
Under the new arrangement, requirements to claim reimbursement for home office expenses have been relaxed in key areas. For instance, before the arrangement multiple people living in the same house could not all claim a deduction. Under the new arrangement, this restriction has been lifted. So, if you and your spouse both find yourselves working from home, you may both be eligible to claim the 80 cents per hour reimbursement rate for your running office expenses.
In addition to this, office area requirements have also been relaxed. Where claimants were once required to have a dedicated office area in their home to be eligible for a deduction, this is no longer required.
With this in mind, the three golden rules of tax deductions still apply:
- You must have spent the money yourself and cannot have been reimbursed
- Your claim must be directly related to earning income, and
- There must be a record to substantiate the claim
What Can I Claim?
If you worked from home between 1 March and 30 June, there are three basic categories of deductions that you may claim under the new scheme:
- You may claim a rate of 80 cents per work hour for all additional running expenses
- You may claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning, and the decline in value of your office furniture, plus the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of your computer, laptop or similar device, and
- You may claim the actual work-related portion of all your running expenses, which you will be required to calculate on a reasonable basis.
Additionally, if your home is used primarily as a place of business, you may be able to claim occupancy expenses for your home; however, claiming these expenses could affect your “main residence exemption” if you sell your house in the future.
How Do I Get Started?
You should never start making major tax decisions on your own, unless you are a tax professional. Contact Amour Accountants today to get more information and expert assistance on which deductions are right for you so you can start saving money today!
Find out more here.
Why not an accountant for self employed?
Need information for your landlord tax return?