Everything You Can Claim on Tax If You’ve Been Working From Home

As if we haven’t suffered enough in 2020, the dreaded time where we all ask each other ‘What can I claim on tax?’ is upon us again. With Aussies slowly making their way back to the office and the country sluggishly returning to the daily grind, filing your tax return is a harsh reminder that life does indeed keep trudging on. But this year, things are a little different and it could certainly fall in your favour.

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“With millions of Australians working from home due to the impact of COVID-19, the tax deductions we normally claim are changing for this tax time,” Mark Chapman, director of tax communications at H&R Block tells Man of Many. “Certainly, for the final four months of the year, there are likely to be significantly lower claims for expenses such as work-related travel, accommodation and clothing. Conversely, working from home claims will increase significantly as employees flee the office for the comfort of home.”

You hear that? Get those receipts out, it’s time to start claiming.

What Can I Claim if I Work From Home?

What you can and can’t claim has always been a bit of a mystery to Aussies, however, in a year as disrupted as this, the confusion is compounded. We got Mark to spell out the key things you should be aware of this End of Financial Year, including the lesser-known costs you should be claiming. Here is what Mark says you can claim for the work-related proportions of household costs;

  • Heating, cooling and lighting bills
  • Costs of cleaning your home working area (including cleaning products or payment for a domestic cleaner if required)
  • Depreciation of home office furniture and fittings
  • Depreciation of office equipment and computers
  • Costs of repairing home office equipment, furniture and furnishings
  • Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)
  • Computer consumables (like printer ink) and stationery
  • Phone (mobile and/or landline) and internet expenses

“Ideally, you should have a specific room set aside as a home office,” Mark says. “If you are using a room with a dual purpose (e.g. dining room), or a room shared with others (e.g. lounge room) you can only claim the expenses for the hours you had exclusive use of the area.”

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How Do I Make a Claim?

While you may think you know what you’re doing, even the way that we make a claim has changed this year, Mark explains. “The ATO has introduced a temporary “shortcut method” of calculating additional running expenses allowing those working from home to claim a rate of 80 cents per work hour during the coronavirus crisis,” he says. “This will apply from 1 March 2020 until at least 30 June 2020. The ATO may extend this period depending on when work patterns start to return to normal.”

The tax specialist suggests that you keep a record of the number of hours you have worked from home as a result of COVID-19. “If you use the 80 cents per hour method, you can make no other claims in relation to working from home. So, items like mobile phone and internet usage are included in the 80 cent rate,” he explains.

Alternatively, you can claim the ATO’s existing flat-rate allowance for working from home of 52 cents per hour. This covers the extra costs of heating, cooling, lighting and the decline in value of the furniture. “All you need to do to claim this is to keep a diary – note the time you start work each day, the time you finish work each day and any breaks. You can then claim 52 cents per hour for each working hour,” Mark says.

In addition, (and this is what makes this rate different to the temporary 80 cent rate) you can also make separate claims for the work-related proportion of items such as your home internet, mobile phone costs and other expenses that directly relate to your work such as stationery and printer ink.

A further option is to claim the actual costs you’ve incurred. “You’ll still need to keep a diary of your work from home hours and you’ll also need to work out the amount of your home (by floor area) that you’re using as your workspace,” Mark says. “From this, you can then work out the work-related proportion of your household expenses and apply this percentage to the actual amount you spend on electricity, gas, water, phone and internet, etc. You’ll also need to keep all the original bills to prove your claim.”

The H&R Block expert reveals that while this method will generally produce a bigger claim than either of the flat-rate methods, the amount of paperwork and calculation involved is much greater. You should use a tax agent to help with your claim if you intend to use this method.

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Is There Anything I Can’t Claim?

Take it from us, the last thing you want is the ATO auditors knocking at your door, so it pays to know what you can’t claim as well. Unsurprisingly, you can’t claim for the cost of tea, coffee, milk and other household items your employer might have paid for at work. You also can’t claim costs associated with home-schooling your children, like buying them iPads and desks.

“So-called “occupancy expenses” also can’t be claimed,” Mark says. “These include things like mortgage interest, rates and home insurance. That’s because these are “fixed” costs and they don’t change simply because you are working from home.”

Like all good rules, however, there are exceptions. “The exception is where you actually run your business from home,” Mark explains. “That could mean someone whose business is based at home (like a hairdresser who uses a room as a salon) or someone who carries out their business at clients premises but uses home as a base for administration, storage, etc (like an electrician who works at customers premises but stores tools at home and has an office to handle the paperwork). If that’s the case, a portion of your occupancy costs can be claimed.”

It bears reminding, however, that people who run a business from home may lose part of the Capital Gains Tax exemption on their home for the part of the home that is used in their business. According to the H&R Block tax specialist, here is a list of everything you can’t claim this financial year;

  • Household items
  • Costs associated with home-schooling
  • Occupancy costs – Mortgage interest, rates, home insurance

If you want to get your tax sorted this year, it pays to hit the professional. Check out H&R Block’s website for more information.

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General FAQ

What can I claim on my 2020 tax return?

This year, due to the COVID-19 restrictions, you may be in for a more sizable tax return. If you worked from home, you can claim heating, cooling and lighting bills, the costs of cleaning your home working area, depreciation of home office furniture and fittings, depreciation of office equipment and computers, costs of repairing home office equipment, furniture and furnishings, small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated), computer consumables (like printer ink) and stationery, phone (mobile and/or landline) and internet expenses.

Can I get more tax back if I worked from home?

Yes, you can definitely get more back this year if you worked from home. You should be able to claim expenses related to your WFH conditions that would regularly be covered by your employer.

Are bank fees tax deductable ATO?

Bank fees that relate to your regular checking account are considered personal expenses and are not deductible.

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