With many Australians continuing to work remotely, claiming work-from-home expenses has become a valuable way to reduce your tax burden. Successfully claiming work-from-home deductions requires careful record-keeping, regardless of the method you choose.

Who Can Claim Work-From-Home Expenses? 

To be eligible to claim work-from-home expenses, you must meet the following criteria:

• Genuine Work Duties: You must be working from home to fulfil your employment duties, not just for occasional tasks like checking emails.
• Additional Running Expenses: Your work-from-home arrangement should lead to extra expenses you wouldn't normally incur for work, such as increased internet usage, phone calls, and electricity for lighting and heating/cooling.
• Record-Keeping: The ATO requires you to maintain proper records to substantiate your claims. This is crucial for both the fixed rate and actual cost methods.

There are two main methods you can use to calculate your work-from-home deduction:

• Fixed Rate Method (Simple): This is a simpler option offering a flat rate of 67 cents per hour worked from home. This rate covers additional running expenses like internet, phone usage, electricity for heating, cooling, lighting, and even stationery. It's important to note that if you choose this method, you cannot claim separate deductions for these covered expenses elsewhere in your tax return. However, you can still claim the decline in value (depreciation) of work-related assets like office furniture and computers.

• Actual Cost Method (Detailed): This method lets you claim the exact work-related portion of your expenses, ideal if your work-from-home costs differ significantly from the fixed rate. However, it requires detailed record-keeping. Track work-related phone bills, internet bills, and even a portion of your electricity based on work hours. Here's the key: you can claim a portion of utilities using the floor space ratio. Simply calculate the percentage your dedicated home office occupies compared to your entire house. Apply this percentage to your utility bills to claim the work-related portion! Remember, meticulous records are crucial for this method.

Keeping detailed records is crucial for the ATO to verify your claim regardless of the methods you choose. Here are the tips for record-keeping:

• Work Diaries: Maintain a work diary or timesheet that accurately tracks the total number of hours you work from home throughout the income year.
• Expense Receipts: Keep receipts for any work-related purchases you make, such as office furniture, equipment, or stationery.
• Apportioned Expenses: If you claim a portion of expenses used for both work and personal purposes (e.g.: electricity), document a fair and reasonable method for calculating the work-related percentage. This could involve tracking your work hours and calculating the corresponding electricity usage.
• Digital Records: Consider using digital tools to manage your records. Many accounting apps can help you track work hours, categorise expenses, and store digital receipts.

If you would like to know more about the information, please visit.

View more articles

Share this post