Don’t forget to keep records when working from home
If you’re continuing to work from home during 2021-22 income year, this is a reminder for you to keep a record of the hours you work from home and keep receipts for all items purchased.
Keeping appropriate records now will allow you to use the method that will give you the best outcome when calculating your working from home deduction in future years.
Regardless of which method is used to calculate working from home expenses, the important thing for you is to continue to keep records of:
- The hours you work from home
- All receipts, including evidence of assets purchased as well as any other work-related items, like paper and ink.
To claim your working from home expenses you must:
- Be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
- Incur additional expenses as a result of working from home.
If you’re a sole trader or business owner and your home is your principal place of business, see Deductions for home-based business expenses.
How to claim work from home expenses
There are three methods to calculate home office expenses in 2020–21 depending on your circumstances:
- Temporary shortcut method – which is an all-inclusive rate of 80 cents per work hour. If you use the shortcut method, you can’t claim any other working from home expenses, including decline in value of office furniture and equipment.
- Fixed rate method – which allows taxpayers to claim 52 cents per work hour instead of recording all their actual expenses for heating, cooling, lighting, cleaning and the decline in value of furniture. You must have a dedicated work area, like a home office, that you use when working from home.
- Actual cost method – this method allows taxpayers to claim the actual work-related portion of all their running expenses, which need to be calculated on a reasonable basis.
You can use more than one methods that will give you the best outcome. But make sure you meet the criteria and record-keeping requirements for each method.
Expenses you can’t claim
You can’t claim a deduction for the following expenses if you’re an employee working at home:
- Coffee, tea, milk and other general household items your employer may provide at work
- Equipment you buy for your children’s education – for example, iPads and desks
- Items your employer provides – for example, a laptop or a phone
- Any items where your employer pays for or reimburses you for the expense.
As an employee working from home, generally:
- You can’t claim occupancy expenses, such as rent, mortgage interest, water and rates
- There will be no capital gains tax (CGT) implications for your home.
Source: The ATO
This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability require a detailed analysis of your specific circumstances.
For further information and expert assistance to prepare your tax return and maximise your tax refund, contact our KMT accountants today!
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