The Australian Taxation Office (ATO) has announced a tax break for employees claiming additional running expenses incurred as a result of working from home during the COVID-19 situation.
Under this ‘shortcut’ method, employees can claim a deduction of $0.80 in their income tax return for the year ended 30 June 2020 for each hour they work from home due to COVID-19.
The ATO does require employees to keep a record of the hours worked from home in order to claim this concessional rate. This can be done in the form of timesheets, rosters or diary entries.
Importantly, this deduction is available regardless of whether the employee has a separate room set aside in their home for working. This may be a benefit to some staff as the ATO has traditionally required an employee has a separate room set up for work, in order to claim home office expenses.
The $0.80 rate is designed to cover all deductible running expenses including:
• Electricity for lighting, cooling or heating and running electronic items for work such as a computer
• Cleaning expenses
• Work-related use of phone or internet
• Stationery and consumables such as printer cartridges
• Depreciation and repair of home office furniture
• Depreciation of a computer laptop or similar device
An employee does not have to incur all of these expenses in order to apply the $0.80 rate.
The $0.80 concessional rate will apply for the period between 1 March 2020 and 30 June 2020.
Alternatively, employees can continue to use the traditional method for claiming a ‘standard’ deduction for home office expenses. This method requires additional supporting documentation and the employee will also need to identify the extent to which costs are incurred for work-related purposes.
The $0.80 shortcut rate is designed to relieve employees of the need to keep a lot of receipts and provides some compensation for additional running costs incurred from working at home at this challenging time.
This information has been provided thanks to NLC, read more about the two methods of claiming for working from home on its blog post.