The shortcut method: Claiming home office expenses

Taxation for Business,Taxation for Individuals

Working from home has become the new normal for most of us over the last few months, and it has seen the costs of operating a home office rise rapidly. On a positive note, a variety of these costs are tax deductible, and thanks to the new shortcut method of calculating home office expenses, tracking your incurred costs has been simplified significantly. The ATO will be accepting this shortcut method when calculating expenses from March 1st, 2020, until June 30th 2020. This period may be extended depending on when work patterns return to normal.

What is the Shortcut Method?

 The shortcut method essentially allows you to claim a rate of 80 cents per hour for running expenses you have incurred by working from home due to COVID-19.

You can use this method when you:

  • Are working from home to complete your typical day-to-day tasks, which is not limited to simply checking emails and making phone calls.
  • Are incurring additional running expenses due to working from home.

The running expenses the shortcut method covers include:

  • Electricity for lighting, cooling, heating, and the cost of running electronic items such as a computer.
  • The depreciation along with repair costs associated with items such as office furniture.
  • Cleaning expenses
  • Mobile phone costs. This includes the depreciation of a handset.
  • Internet expenses.
  • Costs of computer-related expenses such as printer ink.
  • Stationary expenses.
  • The depreciation of your primary device used to complete your work (i.e. laptop, desktop computer).

The shortcut method requires that you have incurred at least some of the above expenses as a result of working from home due to COVID-19. However, if you use the method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above.

You are also required to keep a record of the amount of hours you have worked from home due to COVID-19 if you wish to claim any of these deductions. This can be for example, payslips, time sheets, diary notes, or rosters.

If you use the short cut method to claim a deduction and lodge your 2019/20 tax return through MyGov or a tax agent, you must include the note “Covid – Hourly rate”

If you would like more information on claiming home office in your 2020 tax return, please contact AWT Accountants at (08) 9303 8900 or by email at clientlink@awtaccountants.com.au