Work From Home - Tax Deduction New Method
A vast majority of workers have, due to the COVID-19 pandemic, been mandated to work from home (WFH) in order to curb the virus’ spread. With the advent of tax season, many have been wondering how to claim tax deductions in this turbulent time. Although working from home has been an option for a lucky few prior to the pandemic, many of us are new to these working conditions. As such, the Australian Taxation Office (ATO) has rolled out a new system to aid in claiming deductions.
Effective for the period of 1 March 2020 - 30 June 2020, taxpayers may claim 80 cents an hour for all running expenses instead of the normal method of calculating costs for specific running expenses. This rate can be individually claimed by multiple taxpayers living in the same house. Taxpayers who choose to utilise this shortcut method do not need to have a dedicated home office space as the ATO recognises that for most it will be their first time working from home. All that is required is a record of the total number of hours one has worked from home.
In total, taxpayers may choose from one of three methods to claim deductions under a WFH situation:
80 cents per hour for all additional running expenses
52 cents per hour for certain expenses + work-related portion of specific expenses
A calculation of all work-related portion of all running expenses
The ATO would like to remind taxpayers that the “three golden rules” for deductions are still applicable:
The money must have been spent by the taxpayer without reimbursement
The claim must be directly related to the process of earning income
The existence of a record to validate the claim
This new shortcut method was created with the hopes of helping taxpayers navigate uncertain territory as well as to assist in streamlining the process for taxpayers. The tax season is often a stressful time for all and with this shortcut method the ATO intends to reduce the frustration involved.
Here’s to hoping we all have a stress-free experience in claiming tax returns and to staying during these unsettling times.