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Tax deductions for working from home

23 July, 2021

Its tax time again - in this piece we outline tax deductions for working from home and the various methods you can use to calculate your entitlement.

As we enter a new financial year, it's a good time to revisit the applicable tax deductions for working from home and how you can boost your tax refund.

Working from home - deductions for expenses

If you work from home and incur expenses that are not reimbursed by your employer, you may be able to claim them as a tax deduction. The expenses must be directly related to working from home.

There are three ways you can choose to calculate additional running expenses including the ‘shortcut method’ which has been temporarily introduced by the Government to make it easy for people to claim their expenses if they’re working from home due to the current health crisis.

Shortcut method

Only available for the period 1 March 2020 to 30 June 2020 for the 2019/2020 financial year and from 1 July to 30 June 2021 for the 2020/2021 financial year.

The shortcut method allows you to claim a tax deduction of $0.80 for each hour worked from home for the allowable period if you incur additional deductible running expenses as a result of working from home. These expenses might include such things as heating, lighting and print cartridges.

If you intend to make a claim, ensure you’ve kept a record of your hours worked at home and include the amount to be deducted at the ‘other work related expenses’ question in your tax return. The ATO also suggest you include ‘COVID-hourly rate’ as the description.

For more information on the shortcut method click here.

Fixed rate method

The fixed rate method allows you to claim:

  • a rate of $0.52 per hour for the cost of utilities, cleaning and depreciation of office furniture.
  • work-related phone and internet expenses, computer consumables and stationery.
  • depreciation of a work-related computer, laptop or home office furniture

For more information on the fixed rate method click here.

Actual cost method

The actual cost method allows allows you to claim actual work-related portion of all running expenses .  Calculated on a reasonable basis, this method involves keeping a diary to record work expenses and keep documentary evidence of specific costs.

For more information on the actual cost method click here.