How to claim tax deductions for Working from Home
If you work from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking the odd call, you’re entitled to claim some tax deductions. These are for the additional running expenses as a result of working from home like heating or cooling that wouldn’t be on if you weren’t at home that day working.
There are two ways to calculate Working from Home Deductions, the fixed cost method and the actual cost method.
The first is the Fixed rate method.
With this method you can claim 67 cents per work hour which will cover the work-related portion of your costs for electricity and gas, mobile and home phone, data, internet, stationery, and computer consumables like printer ink, USBs and cables.
The fixed rate covers the cost of all these things, so you cannot claim a separate deduction for them. It also saves a lot of time, since you won’t need to calculate the exact proportion of your electricity or internet thatyou use for work.
You will need to keep records or receipts for each of these expenses.
You do not need to have a dedicated home office to claim using this method.
To use the fixed rate method you will need to show the ATO exactly how many hours you work from home using a diary or timesheet for the entire year. The good news is that I've made a Working from Home Diary Excel Spreadsheet for you to record the total number of hours you work from home.
You can separately claim any depreciating assets such as computers and office furniture, and also for their repairs and maintenance. If you have a dedicated home office, you can claim a separate deduction for its cleaning costs.
The second method is the Actual cost method.
In this method you work out the actual work-related portion of all your running expenses and claim that. These are the actual additional running expenses as a result of working from home. To show this you need to keep a diary throughout the year showing the number of days you worked from home. I’ve made an Excel Worksheet for you to record this.
You need to keep a record of what you spend on expenses and items you buy to work from home. If it’s something you use for both work and home, like internet costs, you need to calculate what percentage it’s used for work and also keep a record of how you calculated it.
The tax office will want to see how you worked out your deduction, so you need keep all the receipts, bills and so on which show the additional running expenses you incurred while working from home.
More deductions
No matter which method is used, when you buy an expensive item, it usually becomes less valuable over time (depreciation). If this item is something you use for work, you can claim this depreciation on yourtax. At present, if it costs less than $300 you can claim its depreciation in the year you bought it. For example, if you purchase a printer for $289 which you use 80% of the time for work-related purposes and 20% of the time for private purposes, you can claim a deduction of $231 (80% × $289) in the income year you purchased it.
If the item costs more than $300, use the depreciation and capital allowances tool to work out how much you can claim over time.
Of course, you’ll need to keep receipts for these items showing when and where you bought it, how much it cost and when you started using it for work. You’ll also need to show how you work out your percentage of work-related use, such as a diary.
By the way, you cannot claim for coffee, tea, milk and other general household items which might be provided by your employer at work. No, not even that Tim Tam at 3pm which keeps you going through the afternoon.
You also cannot claim a deduction for the cost or items your employer provides like a laptop or mobile phone or for expenses which your employer has reimbursed you.
If you have a dedicated home office which is your principal place of work, you may also be able to claim occupancy expenses like your rent or mortgage, council rates, water rates and home insurance. However, this means that when you sell your home it will be subject to capital gains tax, so talk to your accountant about whether this is worthwhile for you.
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