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ARTICLE 14:

Home Office Expenses

The proportion of people working from a home office environment over recent months has never been greater, and with this trend likely to continue for some time yet, there are a number of deductions taxpayers should be aware of prior to lodging their tax returns.

Any expenses that have been incurred because people are working from home following the lockdown can potentially be claimed as a tax deduction. Many workers will notice a marked increase in expenses such as their electricity and gas bills, as well as one-off purchases such as home desks, chairs, lap tops and computers, and printers.

Deductible running expenses include:

  • Utilities such as heating and lighting
  • Cleaning costs for the work area
  • Mobile or landline phone expenses for work calls
  • Internet connection
  • Stationery and computer accessories such as print cartridges
  • Repair costs for home office equipment and furniture
  • Depreciation of home office equipment, computers, furniture and fittings
  • Small capital items such as a computer (purchased for the purpose of working from home) can be claimed if they cost under $300. If the cost exceeds $300, the decline in value can be deducted.

 

Importantly, the ATO has introduced a new method for calculating home office expenses, where people can claim expenses at a rate of 80 cents for each hour worked from home as a result of the lockdown. The shortcut will apply from 1 March 2020 to 30 June 2021.

Taxpayers will need to keep a record of hours worked, such as timesheets or rosters and as an alternative, they can still use existing deduction methods, albeit these are more time consuming. Any costs can be apportioned to the extent that they are work related.

Effective tax planning strategies can assist with both minimising tax bills and increasing the likelihood of a refund from the ATO. As a general rule, taxpayers should also aim to lodge a tax return early if a refund is expected as it not only ensures prompt processing, but can help with reducing any ongoing quarterly tax instalment payments.

Disclaimer: This document should not be interpreted as tax advice. All information is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.

 

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