Claiming home office expenses in 2020.

So far, this year has been a bit different than most of us expected.

Many people are working from home. Some for the first time. And that means that when it comes time to lodge 2020 tax returns there will be people claiming home office expenses for the first time.

Working from home?

If you have worked from home in the past you probably are already aware that you have to meet certain conditions to claim home office expenses.

This year, because of the unusual circumstances, the ATO have introduced a temporary simplified method which is an increased cents per hour method for all additional running expenses. You can read the ATO’s guide to working from home during COVID-19 here.

But how do you work out what you can claim? And more importantly how do you prove you are eligible to claim it?

Can I claim home office expenses?

Whether you have been working from home for the first time or it is business as usual you must meet the following guidelines in order to make a claim.

  1. You have to have paid the expense yourself and not been reimbursed.
  2. The expense must be directly related to earning income.
  3. You need to keep a record and be able to prove how you calculated your claims.

Increased ATO Scrutiny of home office expenses

The ATO have already indicated that they will be focussing on the claiming of home office expenses in 2020 tax returns. So it is important that you keep good records to ensure you can substantiate any claims you make.

This includes keeping receipts for any purchases that you have made to allow you to perform your work. This might include things such as stationery or electronic equipment like webcams or printers. If you are using your personal phone or internet connection you may need to determine the percentage used for work purposes.

You will also need to keep a record of how many hours you have spent working from home.

Calculating additional running expenses

There are three different ways you can choose to calculate your additional running expenses.

  1. Shortcut method – claim a rate of 80 cents per work hour for additional running expenses
  2. Fixed rate method – which allows you to claim all of:
    • a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture
    • the work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery
    • the work-related portion of the decline in value of a computer, laptop or similar device
  3. Actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

Records you must keep

If you use the shortcut method of claiming, you only need to keep a record of the hours you worked at home, for example timesheets or diary notes.

If you use the other methods, you must keep a record of the number of hours you worked from home, along with records of your expenses.

Need more information?

If you want to know more about claiming home office expenses or how to substantiate them, please get in touch.