WEALTH HUB JOURNAL

You Worked from Home Last Year. What Can You Claim?

The past year has brought some unexpected stress into our lives, to put it mildly. If, like many Australians, you worked from home during the pandemic, tallying up your business expenses might have you scratching your head. But if you don’t want dubious tax write-offs to land you in the middle of an audit, you need to be careful.

It’s always a good idea to talk to the professional team at Wealth Hub Australia, but let’s start by taking a look at some of the expenses you can claim now that we’re approaching one of the most confusing tax times in living memory—without running afoul of the ATO.

The Shortcut Method

If you haven’t been meticulous in your record-keeping, you can use the shortcut method to easily figure out the deduction you can claim. Here’s the rule: For every hour you worked from your home office between 1 March 2020 and 30 June 2021, claim 80 cents.

Remember this is a lump sum, so there are no additional tax breaks for utility bills, equipment purchases, cleaning costs for your workspace, or anything else. But even though it may not maximise your refund, all you have to do is prove the hours you worked with a timesheet or work journal.

The Fixed-Rate Method

To potentially get more from your tax refund and tally up a more accurate record of your expenses, start by adding up 52 cents for every hour you worked from home. In addition, you can claim all the business expenses you couldn’t deduct in the shortcut method. Calculate your phone and electric bills, depreciation of your equipment, and office consumables like printer supplies. A home office expenses calculator may help.

Here are the records you must keep for the fixed-rate method:

• A work diary of the actual hours you worked from home or a log that shows a representative four-week period.
• Receipts or other proof of your expenses and asset depreciation.
• Phone logs that detail your work-related calls over a four-week period.
• A diary of your work-related internet use and the percentage of the year you use your assets exclusively for work purposes.

Actual Costs

This option may net you the largest possible refund, but it requires you to have kept meticulous documentation. Once you’ve gathered your stack of receipts and records, you can only include expenses you incurred through working from home—and they can’t be expenses that were in any way compensated or reimbursed by your employer.

This means if the company gave you an equipment allowance or paid for your internet, those items must be omitted from the list. Also, expenses for things that would have been provided at work but you had to buy on your own—like coffee and creamer or donuts on Fridays—won’t make the cut. However, here’s what will:

• Phone and internet – You can claim the costs of phone and internet use for work-related purposes, but you have to keep records of your usage.
• Utilities – The portion of your electric bill that goes to heating, cooling, and lighting your workspace during work hours is deductible.
• Depreciation of assets – You can claim value lost to wear and tear on office equipment that cost more than $300. You can also claim the total cost of assets less than $300 in the income year you purchased them if you use them mainly for work. However, adjust your deduction to reflect private use of that asset. If you bought a chair for $200 but 10% of its use is outside of work time, you can only deduct $180 (90% x $200).
• Office cleaning – If you had your workspace professionally cleaned or you bought a new vacuum to keep your area tidy, claim the portion of the costs that relate directly to your home office—if you kept the receipts.
• Continued professional development – Self-education and skill-building are wonderful things, and if you have a formal qualification related to your career path to show for your studies, a portion of the course fees and supplies may be deductible. If you learned Japanese because your company just opened a Tokyo office, you may be in the clear. If you learned it because you met someone on a dating app, definitely not.

Tax Time Made Easy

Working from home has been a new experience for a lot of us this past year, but after all the uncertainty, you can be confident in which work expenses you can claim on your taxes. Contact our team of financial experts at Wealth Hub Australia today so we can remove the mystery this tax season, help you maximise your tax return, and put you on track to reach your financial goals.

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