Working from home tax deductions explained
The rise of remote working has seen more and more employees switch to working from home. For many Aussie tax payers, this opens up an entire new realm of home office tax deductions. At National Accounts, we’re your trusted tax specialists, here to ensure you’re not paying more tax than you need to. We’ve rounded up all the tax deductions you can claim for working from home in the 19/20
Home office equipment deduction
Working from home often requires you to have an office set up, and that can be costly. From office chairs to laptops and printers, you’re entitled to deduct a portion of your costs. You can claim the full amount of these items if they’re under $300, or the decline in value on items over $300.
Home office utilities deduction
You’re also eligible to claim a portion of the utilities (lighting, heating, cooling) used while working from home. You can either claim these expenses using the fixed cost method (52c per hour for the 19/20 tax year), or you can calculate your actual expenses using the actual cost method.
For the fixed cost method, you’ll need to keep a record of the hours you’ve worked from home throughout the year, or a diary of a four-week representative period of your working pattern.
For the actual cost method, you’ll need to work out the actual cost per hour worked and the number of units used for heating, cooling and lighting.
Phone and internet work from home deduction
Employees who work from home can also claim a portion of their phone and internet costs, providing you have paid for them yourself and have reasonable evidence to substantiate their claim.
For claims over $50 in total, you’ll need to reasonably establish the percentage of your phone and internet costs that were for work and personal use. You may then deduct the work related percentage from each bill, ensuring you retain records to back up your claims.
Work from home occupancy deductions
Generally, employees are not eligible to claim a portion of their rent or mortgage expenses for their workspace, except in either of the two scenarios:
– no other place of work is provided by your employer and you are required to dedicate a space to that employer’s business
– the space in the home is of a business nature and is not suitable for domestic use
Working from home tax deductions as a result of COVID-19
Employees who are temporarily working from home as a result of the COVID-19 pandemic have the option to use the new shortcut method of deducting 80c per hour they work at home, to cover all their working from home expenses.
If you’re working from home due to COVID-19, you can choose the above-mentioned shortcut method, or you can choose to use the standard fixed costs or actual cost methods available all year round.
The 19/20 tax year is set to be one of the most complex years for tax returns, with more employees than ever claiming home office tax deductions. At National Accounts, we’re committed to supporting you through your tax return, ensuring every expense you incurred is accurately accounted for. Reach out today for assistance filing your 2020 tax return and claiming those all important working from home tax deductions.