WFH? Tax Time made Easy! UPDATE!!
Tax Time made Easy! UPDATE!!
In another example of “novel times call for novel responses”, the Government and the ATO have announced a special arrangement this year due to COVID-19 to make it easier for people to claim deductions for working from home.
The new “shortcut method” will allow people to claim a tax deduction at the rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.
How is this different from my earlier post regarding the 52c per hour claim?
The 80c per hour is an all-inclusive rate, whereas the 52c is for home running expenses and depreciation exclusive of other expenses like stationary, internet and phone.
Further taxpayers will be required to keep a record of the number of hours worked from home for the period they apply the Shortcut method whereas the 52c method is only for 4 weeks.
These arrangements have been put in place for expenses incurred between 1 March 2020 and 30 June 2020. The matter will be revisited after 30 June 2020 in respect of the following financial year.
For more information, please go to the ATO website here.
Tax time made Easy - Working from Home tax deductions
We all love getting a tax refund so when you have been forced to work from home you may have additional deductions that aren’t normally part of your tax return.
The problem is, tax can be complicated, so the ATO has made it ‘easier’ to claim your expenses incurred from WFH.
Running costs are the main category – which I alluded to in my earlier post on 24 March – but these can be difficult to calculate so let’s just apply a fixed rate!!
Depreciation (part of the value of your new desk and chair), power, heating and cooling can now be claimed at a rate of $0.52c per hour that you work at home!
So, if you work are working 20 hours from home, then you would calculate your deductible portions as $0.52 x 20 Hours x 12 weeks (3 months to June 2020) = $124.80
If you work more than this, then you claim more, however as always, there is a catch…..
You need to keep a diary for at least 4 weeks tracking your working hours – include the date worked, time you commenced work, the work activity, the time ceased and exclude any breaks you have – it doesn’t matter if you use a paper based or electronic tracker.
After 4 weeks, you can use the diary to estimate the hours worked for the rest of the year (as long as your situation doesn’t materially change).
You can still claim internet and phone on top of the running costs above on a percentage basis.
- Coach Rach
