Working from home: what you can claim at tax time

A guide to your tax time submissions for the financial year 2019/20

We may remember 2020 as the year that working remotely became the ‘new normal’, with 88% of organisations requiring or encouraging employees to work from home as a result of the coronavirus. Many retailers such as Officeworks and JB Hi-Fi have seen a jump in sales, with monitors, laptops and small desks in high demand. 

If you’ve recently traded the water cooler for the Zoom window, you may be able to make some additional claims at tax time. 

A woman sits at her desk with her laptop and smiles at the camera.

Am I eligible to make a claim for expenses incurred working from home? 

For your claim to be legitimate, you must have paid for the items or expenses that you are claiming, without having been reimbursed by your employer. The claims must be directly related to your income-generating work, and you must keep records to support the claims. 

What kinds of expenses can I claim? 

The ATO provides guidance on what you can claim for working from home. The types of expenses you can claim fall into a few categories. Two are particularly relevant for those working from home as a result of the pandemic: 

  • home office running expenses (lighting, heating/cooling, cleaning, depreciation of equipment, repairs, consumables; and 
  • phone and internet expenses. 

A third category, occupancy expenses, may also be relevant if you run a business from your residence on an ongoing basis. Note that occupancy expense claims can have capital gains implications—see the ATO website for more details.

How should I calculate my expenses in order to make a claim? 

You have three options: the shortcut method, the fixed rate method, or the actual cost method.

Given the number of people currently working remotely, the ATO has introduced a simplified ‘shortcut’ method for calculating running expenses incurred as a result of working from home. This simplified method may be used for the period of at least 1 March to 30 June 2020, but this period may be extended if social distancing guidelines persist beyond this period. 

The shortcut method is simply to use a rate of 80 cents per hour to cover all additional running expenses. (This does not include assets that fall below the depreciation threshold, which are still eligible for an instant write-off, regardless of the method you use.)

Alternatively, you may use either of the two methods which are normally available for claiming expenses related to working from home: the fixed rate method and the actual cost method.

For the fixed rate method, you may claim all of the following:

  • a flat 52 cents per work hour; plus 
  • the percentage attributable to work use of the following actual costs: phone and internet, computer consumables, stationery; plus
  • the percentage attributable to work use of the decline in value of a computer, laptop, or similar. 

The actual cost method is available to people with a dedicated work area at home. Under this method, you should keep a record of your work hours (or a representative four-week period), and may claim the percentage attributable to work use of all of your running expenses, adjusted for shared use. These include:

  • cleaning expenses, as a percentage of the floor area of your residence; 
  • heating, cooling and power expenses, taking into account the cost per unit of power, average use per hour of each appliance or light, and total hours used for work-related purposes;
  • depreciation expenses for assets that cost $300 or more, calculating the percentage of use of the asset that was exclusively for work, and deducting that proportion of the decline in value of the asset (keep original receipts). 

You can also use this method if you don’t have a dedicated work area, but this will usually work out as an insignificant amount, and you cannot claim heating, cooling or lighting when you are sharing the area with others in your household. 

What records should I keep?

You must retain records that support your expense claims. These records include:

  • receipts for equipment and supplies—both for consumables (such as paper and toner) and depreciating assets (such as computers);
  • bills (such as mobile bills or your video communications subscription);
  • a diary of the dates and hours you worked from home. 

Take the time to understand what you’re entitled to claim. The ATO has lots of information on its website, which has been updated for COVID-19, as well as some helpful tools (web addresses below). You can embrace the ‘new normal’ of home-based work without overpaying for the privilege.

Useful resources (ATO tools and calculators)