Home Office Deductions 2020
WITH THE NEW COVID-19 SHORTCUT METHOD
When it comes to working out just how many Home Office items you can claim as deductions, it's always helpful to know the best way to calculate your costs.
The good news is there is now something called The Shortcut Method, which is available for employees who were required to work from home due to COVID-19.
Always work from home?
You can still use either the Fixed Rate and/or the Actual Cost method. These are also summarised below.
The Shortcut Method
The ATO have introduced a shortcut method to simplify how you calculate your deduction for working from home. This method is temporary and only available for the period 1 March to 30 June 2020.
All employees working from home in this period can use this method.
Using this method, you can claim 80 cents per hour for each hour you work from home during the period 1 March to 30 June 2020.
You can choose to use this rate if you:
- are working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls
- have incurred additional running expenses as a result of working from home.
The shortcut method covers all of your work from home expenses and as such if you select to use it you can't claim any other expenses for working from home for this period.
You don't need to have a dedicated work area to use this method. However, you must keep a record of the number of hours you have worked from home. This could be a timesheet, roster, a diary or documents that set out the hours you worked from home.
You don’t have to use the shortcut method, you can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome as long as you meet the working criteria and record keeping requirements for each method.
If you had a work from home arrangement before 1 March 2020, you will need to use one of the existing methods to calculate your deduction for the period 1 July 2019 to 29 February 2020.
For more information about the shortcut method, see employees working from home on the ATO website.
Fixed Rate Method
You can claim a deduction of 52 cents for each hour you work from home for the work-related expenses you incur for additional running expenses. The fixed rate covers all expenses you incur for:
- the decline in value of home office furniture and furnishings – for example, a desk
- electricity and gas for heating, cooling and lighting
- the cost of repairs to your home office equipment, furniture and furnishings.
To claim using this method, you must keep records of either:
- your actual hours spent working at home for the year
- a diary for a representative four-week period to show your usual pattern of working at home.
You can apply the four-week representative period across the remainder of the year to determine your full deduction amount. However, if your work pattern changes you will need to create a new record.
To use this method, you need to have a dedicated work area, such as a home office when you work from home.
This method doesn't include the following, so you will need to separately calculate your work-related use for:
- phone expenses
- internet expenses
- computer consumables and stationery – such as ink
- decline in value of equipment – such as phones, computers and laptops.
To claim the work-related portion of these expenses you must have records such as:
- receipts or other written evidence
- phone accounts identifying your work-related calls and private calls to work out your percentage of work-related use for a representative period
- a diary that shows a representative four-week period of your usual pattern of working at home
Actual cost method
Under the actual expenses method, you can claim the additional running costs you directly incur as a result of working from home. This may include the following expenses:
- electricity and gas for cooling, heating and lighting
- the decline in value of home office furniture (desk, chair) and furnishings,
- the decline in value of phones, computers, laptops or similar devices
- phone expenses
- internet expenses
- cleaning (if you use a dedicated area for working)
- computer consumables and stationery
If you don't have a dedicated work area, such as a home office, you will generally only incur minimal additional running expenses. For example, if the area you use for work is a common area of the home such as a lounge room and that area is being used by other members of your household for another purpose (such as, family members watching television) at the same time you're working, you won't be incurring any additional costs for lighting, heating or cooling as a result of working in that room.
To calculate the work-related portion of your actual expenses you must have records. You can:
- keep a record of the number of actual hours you work from home during the income year
- keep a diary for a representative four-week period to show your usual pattern of working at home
You must take into account other members of your household when you work out your expenses. If a member of your household is using the same area of the house or the same service when you're working, you must apportion your expenses accordingly.
For more information on the actual cost method and calculating and apportioning the expenses visit the ATO website ACTUAL COST METHOD
Record Keeping
Regardless of the method you choose to use to calculate your expenses for working from home, you will need to have records.
If your circumstances change part way through the income year – for example, your usual pattern of work from home changes – you will need to keep separate records to show this change.
If you use the four-week representative period to calculate your usage over the income year, you will need to either:
- complete a new four-week representative period to show your usage in your new circumstances
- keep separate records for the period your circumstances changed.
For example, if you usually work from home one day a week and due to an emergency situation such as COVID-19 or bush fires you're required to work from home for a period, you will need to separate keep records for both situations. This includes:
- the actual hours you’ve worked from home due to the emergency situation
- your usual working from home arrangements.
Your four-week representative period will no longer be valid in these circumstances.
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