Working from home has become the new norm for people forced to set up remotely in the wake of the coronavirus lockdown that has swept across the globe. Quarantine has seen a spike in the sales of home office products like desks, computers and stationery – which is not surprising given the findings of one survey that suggested 88 per cent of organisations have encouraged or required staff to work from home. For those who rushed out to purchase supplies to set up a home office – you may be eligible for a significant tax break.
Here’s some good tax news: claiming has just been made easier
Claiming work related expenses is nothing new; but the way of calculating tax deductions has changed with a more simplified method introduced for those working from home as a result of the pandemic.
This new process, dubbed the “temporary shortcut method”, allows workers to claim 80 cents for every hour they work from home between March 1 and June 30 to cover additional running expenses like electricity, phone and internet costs, cleaning and even depreciation of home office furniture and fittings.
To qualify, you must keep a record of the hours you worked from home, such as a timesheet or diary. And you must legitimately be working from home, not just checking emails or answering calls.
Other older methods of calculating running expenses – including the 52 cents fixed rate method or alternatively the actual cost method – will remain. The choice is yours; you opt for the option that gives you the best result.
The difference? Under the fixed rate method, you will still need to apportion expenses between private and business use and, unlike the shortcut method, you must have a dedicated work area such a private study, when you work from home.
But wait, there’s a catch
If you invested in a new blender or toaster for your temporary home work station, unfortunately you can’t claim general household items like tea or coffee that your employer would have otherwise provided at work.
And if you juggled remote learning with your school aged children and purchased education supplies like an iPad, you can’t claim those either.
For those who are working from home only as a temporary measure due to COVID-19, you cannot claim tax deductions for mortgage or rent expenses. However, if your home is also your principal place of business, you can claim a portion of these costs for the rooms or spaces that relate to your business.