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If you’re, working from home because of COVID-19 you’ve probably realised that there are a few extra expenses to consider in your tax return. Perhaps you’ve rushed out to buy a new desk for your spare room, some stationery or even a new laptop. Fair Tax Accountant e offers very affordable rate with committed and passionate helping hand to our clients with tax return service in Geelong and Belmont area. We can provide a range of solutions to simplify your Bookkeeping, Accounting and Taxation requirements.

And then there’s the change to your next round of household bills like power, heating and cooling, as well as internet costs.

While some employers will fork out for equipment, or even pay a daily allowance for bills, most of us will find that the best way to get some money back is by making a claim in your tax return.

Let us see what we can claim and what is eligible.Tax Accountant Geelong

Shortcut method

ATO have introduced a shortcut method to simplify how you calculate your deduction for working from home. This method is temporary and only available for the period 1 March to 30 June 2022. All employees working from home in this period can use this method in tax return.

Using this method, you can claim 80 cents per hour for each hour you work from home during the period 1 March to 30 June 2020. For any further queries Fair Tax accountant team can help you.

You can choose to use this rate if you in your tax return:

  1. are working from home to fulfill your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls
  2. have incurred additional running expenses as a result of working from home.

The shortcut method covers all of your work from home expenses, such as:

  1. phone expenses
  2. internet expenses
  3. the decline in value of equipment and furniture
  4. electricity and gas for heating, cooling and lighting

If you use this method, you can’t claim any other expenses for working from home in your tax return.

You don’t need to have a dedicated work area to use this method. However, you must keep a record of the number of hours you have worked from home. This could be a time sheet, roster, a diary or documents that set out the hours you worked from home.

You don’t have to use the shortcut method, you can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome as long as you meet the working criteria and record keeping requirements for each method.

If you had a work from home arrangement before 1 March 2020, you will need to use one of the existing methods to calculate your deduction for the period 1 July 2019 to 29 February 2020.

The shortcut method includes decline in value of all items. If you choose to use this method there is no requirement to separately calculate the decline in value of equipment or depreciating assets. However, as you may combine methods or use a different method in later years it’s important to keep the:

  1. purchase receipts for depreciating assets or equipment you use when working from home
  2. records of how you calculated your work-related use of the asset
  3. your decline in value calculations.

For more information about the shortcut method, see employees working from home during COVID-19.

Fixed rate method

You can claim a deduction of 52 cents for each hour you work from home for the work-related expenses you incur for additional running expenses. The fixed rate covers all expenses you incur for:

  1. the decline in value of home office furniture and furnishings – for example, a desk
  2. electricity and gas for heating, cooling and lighting
  3. the cost of repairs to your home office equipment, furniture and furnishings.

To claim using this method, you must keep records of either:

  1. your actual hours spent working at home for the year
  2. a diary for a representative four-week period to show your usual pattern of working at home.

You can apply the four-week representative period across the remainder of the year to determine your full deduction amount. However, if your work pattern changes you will need to create a new record.

To use this method, you need to have a dedicated work area, such as a home office when you work from home.

This method doesn’t include the following, so you will need to separately calculate your work-related use for:

  1. phone expenses
  2. internet expenses
  3. computer consumables and stationery – such as ink
  4. decline in value of equipment – such as phones, computers and laptops.

To claim the work-related portion of these expenses you must have records such as:

  1. receipts or other written evidence that shows the amount spent on expenses and depreciating assets you purchased
  2. phone accounts identifying your work-related calls and private calls to work out your percentage of work-related use for a representative period
  3. a diary that shows
    • a representative four-week period of your usual pattern of working at home
    • any small expenses ($10 or less) that you can’t get a receipt for totaling no more than $200
    • your work-related internet use
    • the percentage of the year you used depreciating assets exclusively for work.

Watch: Claiming for a computer, phone or other electronic device as a work-related expense

Calculation methods

There are three ways of calculating home office expenses depending on your circumstances. The methods are the:

  1. Shortcut method (80 cents) – new due to COVD-19 and only available 1 March to 30 June 2020
  2. Fixed rate method (52 cents)
  3. Actual cost method.

You must meet the record keeping requirements and working criteria to use each method in you tax return.

Depending on the method you choose you may need to work out your claim for some expenses separately. For example, work-related phone and internet costs are not included in the fixed rate method.

Your choice of method in filing tax return.

The shortcut method was introduced due to the COVID-19 situation and the increased number of employees working from home from 1 March – 30 June 2020.

You can choose to use the method or methods in your tax return that will give you the best outcome as long as you meet the working criteria and record keeping requirements for each method. See, Examples – comparing methods.

You may need to use one or both of our calculators to work out your deduction for the year.

https://www.ato.gov.au/Calculators-and-tools/Home-office-expenses-calculator/

Let the pros at Fair Tax Accountant based in Geelong help with fulfilling all your tax return filing requirements

Our Tax accountant in Geelong provide tax return service across Geelong,Belmont, Highton, Grovedale and Waurn Ponds area. We offers Very affordable rate with committed and passionate helping hand to  tax return service in Geelong and Belmont area. We can provide a range of solutions to simplify your Bookkeeping, Accounting and Taxation requirements.

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