Tax Boost for Working from Home Expenses – Flat Rate or Fixed Method?

18Jun '20

Tax Boost for Working from Home Expenses – Flat Rate or Fixed Method?

The ATO has new rules for allowing taxpayers to claim more working from home costs in their annual tax return.

Taxpayers can claim a flat rate of 80 cents per hour for all their running expenses while working at home rather than needing to calculate costs.

If there are a number of people living in the same house they will each be allowed to each claim the new rate.  You no longer have to have a dedicated work area either.

All that is required at tax time is a record of the number of hours worked from home as evidence of your claim.

This has been backdated to 1 March 2020 therefore expenses before that date cannot be calculated using the shortcut method.   These rules will remain until at least June 30.

Under the old rules, workers could claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and depreciation in value of office furniture using a timesheet.

You could also calculate the work related portion of their phone and internet, computer consumables, stationery and the depreciation of their computer.

For workers with significant or expensive depreciable assets such as laptops, office furniture, screens and printers the existing fixed rate method which allows 52cents per hour for running costs plus the work related portion of depreciation may deliver a great tax saving.

Best Business Practice can assist by determining which method to use depending on your circumstances to get you the best tax result.

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