Working from home? Don’t forget these tax deduction facts

People looking at their tax returns, considering bill for tax deductions.

It’s rolled around far too quickly, but tax time is almost upon us once again. Like last year, you might have extra questions if you’ve been working from home or have taken up a side hustle over the last 12 months of COVID-induced workplace weirdness.

So you can add a solid tax return to your savings, here’s a little reminder about some of the important things to remember when lodging your claims.

The ‘shortcut method’ is still available if you’re WFH

The Australian Taxation Office (ATO) is reminding everyone that you can still claim working from home expenses if you’ve continued your daily work routine from your home office.

ATO Assistant Commissioner, Tim Loh says that even though some Aussies are shifting back to work in office environments, many companies or employees have opted to continue working from home one or multiple days a week. 

He says the ‘shortcut method’ – where you can claim an 80-cent-per-hour tax deduction when working from home – is available again this financial year.

“The only proof you need is a record of the number of hours you’ve worked from home, such as a timesheet,” Loh said.

As was the case in 2020, this is a bump-up from the standard 52-cent hourly rate, which considers heating, cooling, lighting and furniture depreciation when WFH. 

But if you have a knack with careful accounting, you can still use the diary and running expenses method. This provides a more detailed overview of separate work-related expenses and could provide better-value tax deductions than the shortcut method in some cases.

“I would encourage you to do your research and keep good records. Keeping track of each individual expense and calculating the work-related use of each one can be fiddly, so be organised,” Loh said. 

Things you can’t claim on your tax return when working from home

While there are plenty of surprising things you can claim on tax, there are a few major things that aren’t tax deductible. This includes:

Personal expenses that might normally be supplied in an office. This includes things like coffee, tea and toilet paper. They might be essential, but since they aren’t directly related to you earning an income you can’t claim these items as deductions.

Large up-front expenses. If you’re looking to make a deduction on something like a computer or a fancy new desk set-up that costs more than $300 (either in total or as a single item) you can’t claim this immediately. Instead, you’ll need to spread the depreciation of the equipment out over a number of years.

Occupancy expenses such as rent, home loan repayments or home insurance. This is because working from home doesn’t qualify your house as a place of business for tax purposes, which would be the requirement for these kinds of claims. 

Anything an employer has supplied or reimbursed you for. If your boss has sent you home with a laptop and desk chair, you can’t go claiming depreciation on these items as they don’t belong to you. Similarly, if you spend money on a work trip or to buy equipment and your workplace has repaid you the cost, you can’t add it to your list of tax deductions.

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