Claiming Home Office Running Costs during the Covid-19 Pandemic

Claiming Home Office Running Costs during the Covid-19 Pandemic

The ATO has announced a temporary short cut method to make it easier for individual taxpayers to claim deductions for running expenses incurred as a result of working from home due to the Coronavirus pandemic.

The ATO will allow individuals to claim a deduction at a rate of 80 cents for each hour an idividual carries out genuine work duties form home during the period 1 March 2020 to 30 June 2020.

The 80 cents per hour method is designed to cover all deductible running expenses associated with working from home including:

  • Electricity expenses associated with heating, cooling and lighting the area at home which is being used for work.
  • Cleaning costs for a dedicated work area.
  • Phone and internet expenses.
  • Computer consumables (e.g. printer paper and ink, stationery)
  • Depreciation of home office furniture and furnishings (e.g. an office desk and chair)
  • Depreciation of home office equipment (e.g. a computer and printer)

This means that separate claims cannot be made for any of the above running expenses (including dpreciation of work-related furniture and equipment).  As a result, using the 80 cents per hour method could result in a claim for running expense being lower than a claim under existing arrangements.

Additionally, according to the ATO’s announcement:

  • There is no requirement to have a separate or dedicated area at home set aside for working (e.g. a private study)
  • Multiple people living in the same house could claim under this method (e.g. a couple living together could each individually claim running expenses while working from home)
  • An individual will only be required to keep a record of the number of hours worked from home during the above period.  This can include time sheets, diary entries/notes or even rosters.

Working from home running expenses that are incurred before 1 March 2020, or incurred from this date where in individual does not use the 80 cents per hour method, must be claimed using existing claim arrangements.  Broadly, these existing claim arrangements require:

  • an analysis of specific running expenses incurred as a result of working from home; and
  • more onerous record-keeping (e.g. the requirement to provide receipts and similar documents for expenses being claimed, as well as the requirement to maintain a time usage diary or similar record to show how often a home work area was used during the year for work purposes).