Work from home deductions

As more and more Australians work from home due to the COVID-19 pandemic, many taxpayers are wondering whether they can claim work from home expenses on their tax return. The good news is that if you are working from home, you may be eligible to claim a deduction for certain expenses.

To start, it's important to understand what constitutes a work from home expense. According to the Australian Taxation Office (ATO), a work from home expense is any expense related to the use of your home for work purposes. This may include expenses such as electricity, heating, cooling, phone and internet expenses.

To be eligible to claim work from home expenses, you must have incurred the expenses as a direct result of your employment and not have been reimbursed by your employer. You must also have spent the money yourself and kept accurate records of all expenses incurred.

The ATO has introduced a new method to make it easier for taxpayers to claim work from home expenses during the pandemic. This method allows taxpayers to claim a rate of 67 cents per hour for all running expenses incurred while working from home. This includes expenses such as electricity, gas, internet, phone, and depreciation of office equipment.

It's important to note that not all work from home expenses are deductible. For example, expenses related to setting up a home office are considered capital expenses and cannot be claimed as an immediate deduction. These expenses must be depreciated over a number of years.

In summary, if you are working from home, you may be eligible to claim a deduction for certain work from home expenses on your tax return. The ATO has introduced a new shortcut method to make it easier for taxpayers to claim these expenses during the pandemic. However, it's important to keep accurate records and understand the rules and regulations surrounding work from home deductions to ensure that you claim legitimate deductions and avoid any potential penalties from the ATO.