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ATO introduces claim shortcut for working from home

Just when you thought it was all doom and gloom, the Australian Taxation Office (ATO) has offered up a good news story.

Not usually renowned for their heartwarming headlines, today the ATO announced people working from home can claim a rate of 80 cents per hour for all their running expenses, rather than calculating specific costs.

The move is considered a special arrangement in response to COVID-19 and is designed to make claiming deductions for working at home easier.

In addition to the blanket 80 cents per hour claim, the requirement to have a dedicated work from home area has also been removed, while multiple people living in the same house are each eligible to claim this new rate.

For example, the ATO explains a couple living together could each individually claim the 80 cents per hour rate.

ATO Assistant Commissioner Karen Foat said the new shortcut method would make it easier for those who are working from home for the first time.

“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” Ms Foat said.

“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.

“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim.”

The ATO further notes, the new shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.

Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.

The ATO said they would review the special arrangement for the next financial year as the COVID-19 situation progresses.

ATO example

Bianca is an employee who works as a copy writer and editor. Bianca starts working from home on 16 March as a result of COVID-19 and replaces her face-to-face meetings with online video conferencing. 

Bianca has just bought a new laptop, desk, chair and stationery. She also wants to claim some additional gas, electricity, phone and internet costs due to working from home.

Under the shortcut method, Bianca can now claim all her expenses under a rate of 80 cents per hour. All she needs is her timesheets.

Bianca can also decide to claim using existing working from home calculations. Under that method, Bianca can claim the desk, chair, gas and electricity under the 52 cents per hour, but would need to work out the decline in value of the laptop, and calculate the work-related portion of the laptop, stationery, phone and internet.

Working from home claims for 1 March to 30 June

The ATO further explains there are three ways that you can choose to calculate your additional running expenses for the 1 March – 30 June period:

  • claim a rate of 80 cents per work hour for all additional running expenses.
  • claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device
  • claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

The ATO is also reminding people that the three golden rules for deductions still apply:

  • Taxpayers must have spent the money themselves and not have been reimbursed
  • The claim must be directly related to earning income
  • There must be a record to substantiate the claim.

Working from home before 1 March 2020

Under the arrangement, claims for working from home expenses prior to 1 March 2020 are not eligible for the shortcut. They should instead be calculated using the existing approaches and are subject to the existing requirements.

Further information is available at: ato.gov.au

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