Tax Deductions for Working From Home During COVID-19 – The Shortcut Method for Calculating Your Allowance

With the current situation surrounding COVID-19, many Australians are finding themselves working from home. This brings in additional expenses that normally, you would not have needed to pay for. There will be extra electricity usage, more internet or phone usage, and you will likely be going through your snack drawer and coffee supply faster than usual. Thankfully you can claim deductions for most of these things (except the snacks and coffee of course).  

As more Australians are working from home during this time, the ATO has decided to make it easier to claim deductions on these expenses. We will break this down for you here.  

What deductions can I claim? 

You may be able to claim tax deductions for the additional expenses that working from home brings, provided that: 

  • You spent the money yourself 
  • The expense is directly related to earning your income 
  • You have the record to prove it 

This means that a deduction cannot be claimed if the items are provided by your employer or you have received reimbursement. 

Usually, there are two methods for calculating your tax deduction for working from home; the fixed rate method and the actual cost method. Due to the current COVID-19 situation, however, the ATO has introduced a simplified solution, called the shortcut method.  

The Shortcut Method 

This new method allows you to claim 80c for every hour you work from home due to COVID-19, from 1 March 2020 until at least 30 June 2020. This is provided that you are working from home to fulfil your employment duties (not just doing minimal activities like occasionally checking emails or taking calls) and are incurring additional running expenses as a result of working from home.  

The ATO has lifted the requirement for taxpayers to have a separate or dedicated area of the home set aside for working in order to claim these deductions. You will still need to keep a record of your hours worked, using things such as timesheets, diary notes or rosters. 

What is covered? 

The shortcut method rate covers all deductible running expenses, including: 

  • electricity for lighting, cooling or heating and running electronic items used for work (such as your computer), and gas heating expenses 
  • the decline in value and repair of capital items, such as home office furniture and furnishings 
  • cleaning expenses 
  • your phone costs, including the decline in value of the handset 
  • your internet costs 
  • computer consumables, such as printer ink 
  • stationery 
  • the decline in value of a computer, laptop or similar device. 

Do I need to record the hours I worked? 

You will need to keep a log of the hours worked from home from March 1st 2020. To do this, you can use your timesheets, a diary of hours kept, a calendar, or other recording methods. This is important to claim the correct deduction, and to prove this should you need to.  

In Summary 

If you are currently working from home due to COVID-19 situation, you should be able to claim tax deductions for any additional costs this has incurred for you. The new shortcut method simplifies the process of calculating these costs by providing 80c per hour worked at home. 

For more information on this new method, or the other calculation methods, visit the ATO website. If you would like assistance in claiming these deductions, or want to know more about what compensation you may be entitled to, feel free to contact Link Advisors for a chat.