In Australia, you can claim deductions for some of your working from home expenses if you are required to work from home for your job. To calculate these expenses, you should follow these steps:
Eligibility
First, make sure you are eligible to claim these expenses. Generally, you must be an employee, not self-employed, and your home office should be used for work-related purposes. Additionally, you need to have incurred the expenses yourself and not have been reimbursed by your employer.
Record keeping
Maintain detailed records of your expenses. This includes receipts, bills, and any other documentation related to your home office expenses.
Determine the deductible expenses
Running expenses: You can claim a deduction for the additional running expenses you incur while working from home. These include electricity, gas, cleaning, and internet expenses. To calculate this, you should keep a record of the total expenses for the year and then determine the work-related use of these expenses. This is usually done by keeping a diary of the hours you work from home and what portion of your home is used for work. For example, if your home office accounts for 10% of the total floor area of your home, you can claim 10% of the total running expenses.
Phone and internet expenses: If you use your personal phone or internet for work-related calls or tasks, you can claim a deduction for the work-related portion of these expenses. Keep records of work-related uses, such as call logs or data usage.
Depreciation of equipment: If you buy or use work-related equipment (e.g. a computer, printer, or desk), you can claim depreciation on the cost of this equipment over its effective life.
Calculate the deduction
Once you have determined the work-related portion of your expenses, you can then calculate your deduction. Typically, you can use the following methods:
Shortcut method (temporary during the COVID-19 pandemic): The Australian Taxation Office (ATO) introduced a simplified method where you can claim a fixed rate of 80 cents per hour for all your running expenses. This is a temporary measure and may change.
Fixed-rate method: You can calculate your deduction using a fixed rate per hour for running expenses and claim depreciation on work-related equipment separately. The ATO provides specific rates for running expenses.
Actual expenses method: This involves calculating the actual expenses for running your home office and claiming a deduction based on the work-related use percentage.
Claiming deductions
When you file your tax return, you can claim these deductions in the appropriate section. Make sure to keep all your records for at least five years in case the ATO requests to see them.
It's essential to consult with a tax professional or check the latest guidelines from the ATO, as tax rules can change, and your individual circumstances may affect the deductions you can claim.
For additional guidance on remote working, click the button below to read our article on how to have a successful working from home experience.
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