Working out tax deductions can be tricky, and for most, it’s far from fun. When you work from home, you’re suddenly facing a whole heap of considerations that you may never have had to consider before. Questions like ‘how much can you claim on working from home expenses?’ can be daunting.
But help is at hand.
Keep reading this article for everything you need to know about working from home expenses. If you’re looking for a Tax Return calculator in Australia, you can find one here.
What are some things you can deduct when working from home?
Asking yourself “what expenses can I claim working from home in Australia?” According to the ATO, working from home can carry numerous deductibles.
Start by taking a look at two things. Where you are and what you’re using when working from home. There’s a whole list of expenses for working from home tax deductions in 2021/22 that you can write off.
- Where you are
Ideally, you’ve got a dedicated home office that you can use when working from home. If it’s a shared space, you can only deduct the proportion of use.
Let’s say that you do have your own home office. While working from home all costs that go into: heating, cooling, lighting and cleaning can be claimed as a tax deduction.
- What you use
You can claim the equipment you use as a working from home expense as well. Examples include:
- Computer expenses
- Mobile use
- Internet use
If you use this equipment for both personal use as well as for work, then you can only claim the proportion you use for work.
If the purchase is over $300, then you will have to claim the depreciation expense of that item. For help trying to work out what you can deduct, or how much your depreciation expense will be, log on to your One Click Life account today and let us help you now.
Any equipment that you use expressly for working from home is deductible. For example, if you purchased a laptop for this purpose, that is deductible.
If anything breaks while working from home, the cost of repair is deductible. As is the cost of replacement.
So, if you were asking the tax office ‘How much can you claim for working from home ATO?’ you should now have a good idea of what’s included.
What can’t you claim?
There are a number of things you can’t claim. If you have a mortgage on the property you’re working within, you usually can’t treat that as deductible. Same with rent, or rates.
The same goes for insurance, unless your work compels you to take out that particular level of insurance, in which case that’s deductible.
There are exceptions regarding occupancy expenses. If you can show that you’ve had to work from home because your employer can’t or won’t provide the environment you need, then you can treat your occupancy expenses as deductible.
Similarly, if you run your business from home and can show that the space you work in cannot be readily used for any other purpose, then you can write off your occupancy expenses.
In these cases, occupancy expenses will be worked out according to the floor area of the property you’re using.
How can you calculate your deductions?
WFH Tax Deduction Method One: Running Expenses
The first method that you can use to calculate your working from home tax deductions is the running expense method. This is used for when you only do some of your work from home (such as during COVID-19) and do not have a dedicated office space.
To use this method, you must keep a logbook of all the hours you work from home and you can claim a nominal rate of $0.52 per hour you work, as a tax deduction. This nominal rate is designed to include:
- Air conditioning costs
The running expense does not include things like your phone, internet, office furniture or computer use, so you will have to calculate those costs separately.
WFH Tax Deduction Method Two: The Shortcut Method
The shortcut method was introduced as a countermeasure to COVID-19 and is designed to make things even easier for people at tax time. The ATO claims that this new method is the “shortcut way to claiming your running expense during COVID-19”.
With the shortcut method, you still have to log all the hours that you work from home. You can then claim 80c per hour working from home. This method is designed to cover all of your working from home expenses, so you cannot also claim things like your computer, phone, and internet use.
Which Method Should You Choose?
So, you’ve worked out what the two methods you can use are and you’ve either got; one with a smaller nominal rate at $0.52ph, but you can claim extra expenses, or you’ve got one with a higher nominal rate at $0.80ph, but you can’t claim extra expenses.
It’s all very nice and well that you know what the two methods are, but how do you work out which one you should choose? Well that completely depends on what your situation is and what your needs are.
If you think you don’t use your computer, internet and phone very much for work compared to your personal use, the shortcut method is probably the best for you. Additionally, if you find it hard to work out these things for your tax return, the shortcut method will again probably be better for you because it is easier to work with.
However, if a large portion of your home computer, internet, mobile phone, and other expenses are used so you can work from home, the regular $0.52ph running expense method will be better for you.
If you are completely stuck on which one you should use and you can’t even work out how to claim electricity on tax, you should contact a tax professional.
Some Other Broad WFH Tax Deductible Expenses
On top of the expense methods discussed above, there are further tax deductions that you can claim that are more broad. For a more extensive list, see a tax agent. Some of the broad expenses include:
- Car expenses if you use your car for work to see clients or carry heavy equipment
- Self education that will help you in your current job
- Union membership fees
- Stationary and equipment
- Industry specific magazines and books
- Computer, laptops and software purchases
The Surefire Way To Maximise Your Tax Return
Did you know that you can also claim the money you spend on a tax professional as a tax deduction? If that’s the case, and a tax professional can significantly boost your tax refund, why wouldn’t you use one?
If you want a quick, easy, surefire way to make sure you claim all of your working from home expenses in your tax return, then look no further than One Click Life. One Click Life offers you a platform to view all of your life admin in one place with the help of some of the best professionals in the industry. Lodge your tax return online with us!
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