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Home Office Expenses & Working from Home Tax Deductions | JJTA

Working from Home Tax Deductions & Home Office Expenses to Claim

Here’s a breakdown of WFH and home office expenses that you can claim with your 2020 tax return

With the COVID-19 pandemic throwing a spanner in the works for 2020, many businesses have had to pivot and continue operations with employees working from home. In a rapidly digitalising world, it’s now become the norm for employees to be able to work remotely and enjoy increased work-life flexibility.

Aside from being able to enjoy a bit more of a sleep-in, attending zoom meetings in your trackies and skipping the daily commute to and from work, it’s also important that you have a basic understanding of what you can and can’t claim when it comes to your home office expenses. Be sure to check out our COVID-19 tax advice and free resources to get a better understanding. From your mobile phone bills to the internet and getting suitable home office equipment, there are ATO-approved, work-related deductions that you can include as part of your 2020 tax return.

Keep reading to learn more, otherwise you can also save yourself the hassle and time of trying to figure it all out by leaving your 2020 tax return to the team at John Jacob Tax Accountants. We’ll have it lodged and approved for you within 24 hours.  

Eligible ATO working from home and home office expenses that you can claim

For the duration that you’ve been working from home, you’ll be able to claim a deduction for any expenses you incur relating to work.

These are the ATO-approved items that can be claimed as home office expenses:

  • Phone bills – mobile and/or landline
  • Internet bills
  • Heating, cooling and lighting bills
  • Computer consumables and stationery
  • Repairing of home office equipment
  • Cleaning and maintenance of your home office
  • Decline in value of home office equipment – such as your phone/s, computer/s and laptop/s
  • Decline in value of home office furniture and accessories
  • Any work-related items that cost less than $300 can be written off in full, no depreciation required
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The working from home deductions that you can claim will also depend on your home office setup

While the expenses mentioned above are considered eligible claims, it’s also important to note what type of home office setup that you have. The ATO has defined the three main types of home office setups as:

  • WFH employees that have a dedicated home office area – You have a study or spare room that is dedicated to work activities
  • WFH employees that don’t have a dedicated home office – You don’t have a home office or room that is dedicated for work activities, such as working in the living room or lounge area
  • You run a business from home – You have a room that’s dedicated to business-related activities
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Non-eligible home office expenses that you can’t claim

As an employee working from home, these are the home office expenses that you can’t claim a deduction for:

  • Occupancy expenses including
    • Rental bills
    • Mortgage interest
    • Water bills
    • Land taxes
    • Rates
  • Coffee, tea, milk and other general household items your employer may provide you at work
  • Your children and their education including
    • Setting up of online learning
    • Home schooling
    • Purchase of equipment such as tablets and desks
  • Expenses that are compensated by your employer
  • Decline in value of items provided by your employer – such as a laptop or a phone.

How to calculate your working from home and home office expenses

Subject to your personal circumstances, there are three main ways that you can calculate your home office expenses, including:

COVID-19 shortcut method – only available between 1 March and 31 December 2020

With the shortcut method, you can claim 80 cents per hour for every hour that you work from home. While you don’t need to have a dedicated work space to use this method, you must keep a record of the total hours you worked from home – this could be a timesheet, roster or diary that lists the hours you’ve worked from home.

Learn more about the shortcut method for calculating your working from home expenses.

Fixed rate method 

To use the fixed rate calculation method, you must have a dedicated home office area to claim 52 cents for each hour you work from home. This also covers the additional running expenses incurred during that time period. For record purposes, you must have a log of your actual hours working at home for the year or a diary to represent your standard pattern of working at home over the course of a four-week period.

Find out more information about the fixed rate method

Actual cost method

Using the actual expenses method, you can manually work out your deduction from the actual costs you incur as a result from working at home.

The ATO provides a detailed breakdown of how you can use the actual cost method to calculate your working from home expenses.

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