We question the actual benefits of claiming the 80 cents per hour to cover all your home expenses during your Corona work from homestay.
So, we’ll go through your options to maximise your tax refund potential.
OPTION #1 – ATO Coronavirus Shortcut method
The shortcut method can only be claimed from 1 March 2020 to 30 June 2020.
You must have a diary, logbook, or timesheets to prove how many hours you worked in your office.
More than one person in your home can claim the shortcut method if they’re working from home and you don’t have to work from a designated office.
This new method is 80c per hour and pretty much covers all of your home office expenses e.g. Home office furniture, equipment, phone, internet, stationery, cleaning, printing, etc.
Pretty easy way to get a little bit of money back on your tax return without the effort.
OPTION #2 – The Normal Way
This method requires some effort from you, but in our opinion, this option is going to get you the best tax deduction, we’ll provide an example at the end of this blog to show you why.
So, what can you claim on your tax return by using the normal method?
Home Office Running Costs
The ATO rate (52c per hour) covers your heating, cooling, lighting, and decline in value of office furniture.
To be able to claim your home office running costs you must have a designated office set up in your home, you need to keep a one-month diary tracking the number of hours worked in your home office.
Phone, Internet & Computer Use
Keep a one-month logbook tracking the usage of each item while working in your home office.
Other Home Office Expenses
You may also be able to claim the following home office expenses:
- Printers, Computers, Laptops (if the individual cost is over $300 the deduction will need to be spread over a number of years)
- Webcams & Headphones
- Subscriptions (this may include subscriptions to work-related software e.g. Microsoft Office)
- Diaries, Journals or Logbooks
What do I need to do to claim these expenses?
Keep copies of your receipts and record the total amounts for each.
Shortcut VS Normal Home Office Claim
Jerry had to start working from home in early March. He had to buy a new monitor, printer cartridges, and a new desk.
He has also kept a logbook tracking his internet use and the hours worked in his home office.
Here’s how Jerry’s home office claims would look for both methods:
Shortcut Method: $480
Normal Home Office Method: $747
By putting in a little bit of effort with logbooks and keeping his receipts, Jerry can claim an additional $267 on his tax return.
To claim home office, always remember the ATO’s 3 Golden Rules:
- You must have spent the money yourself and not been reimbursed
- It must be directly related to earning your income and
- You must have a record to prove it
Until next time, wash your hands, stay healthy and start working on those logbooks
Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.