Temporary arrangements have been put in place by the ATO for people working from home due to the coronavirus crisis.
Taxpayers working from home may now claim a rate of 80 cents per hour and will only be required to keep a record of the number of hours they have worked from home, rather than needing to calculate specific running expenses. See this ATO page for details (scroll down to “Shortcut method”).
Clients can use this method as long as they are:
- working from home to fulfil employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
- incurring additional deductible running expenses as a result of working from home.
There is no need to have a separate or dedicated area of the home set aside for working, such as a private study.
The new arrangements do not prohibit clients from making a standard working from home claim using the two standard approaches should they wish to do so.
The short cut deduction method will make it easier for many Australians who are working from home for the first time due to COVID-19 when it comes to accurately completing their tax return.
These arrangements have been put in place for expenses incurred between 1 March 2020 and 30 June 2020, with the ATO undertaking to review these arrangements in line with COVID-19 developments to see if they are required for the next financial year.
Note that when using the shortcut method to claim a deduction, when lodging the 2019-20 tax return, taxpayers are required to include the note ‘COVID-hourly rate’ in the return.