The Australian Taxation Office (ATO) is announcing special arrangements this year due to COVID-19 to make it easier for people to claim deductions for working from home.

The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.

The ATO has also advised that multiple people living in the same house can claim this new rate.  For example, a couple living together could each individually claim the 80 cents per hour rate.  Previously, there was also a requirement to have a dedicated work from home area.  This has been removed under the new arrangement.

To be able to claim the new rate of 80 cents per hour, an employee will only need to keep a record of the number of hours worked from home.

This new shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.

It must be noted that claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.

The ATO has stated that they will review the special arrangement for the 2021 financial year as the COVID-19 situation progresses.

Working from home claims – 1 March 2020 to 30 June 2020

There are three ways that you can choose to calculate your additional running expenses for this period:

  • Claim a rate of 80 cents per work hour for all additional running expenses
  • Claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and decline in value of office furniture + claim a portion of your phone and internet expenses, stationery, computer consumables and decline in value of a computer, laptop or similar device
  • Claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis

The ATO is also reminding people that the three golden rules for deductions still apply

  1. Taxpayers must have spent the money themselves and not have been reimbursed
  2. The claim must be directly related to earning income; AND
  3. There must be a record to substantiate the claim

Working from home claims – 1 July 2019 to 29 February 2020

Claims for working from home expenses prior to 1 March 2020 should be calculated using the existing approaches and are subject to the existing requirements.

For any further information, please contact our office on (07) 5413 9300 or visit the ATO’s website where there is an abundance of information available on COVID-19 measures https://www.ato.gov.au/.