The end of the financial year is looming, and with many Australians still working from home thanks to COVID-19, you may have some questions about what you can and can’t claim when tax time rolls around.
The Australian Taxation Office (ATO) has announced that this year, they will be cracking down on people trying to claim more than what they are entitled to. Basically, there are three general rules when it comes to figuring out what you can claim on.
First, you must have paid for the item/service with proof such as a receipt. Second, the expense must be work-related. And third, you must not claim something that you get reimbursed or compensated for by your employer. Which begs the question…
What can you claim when working from home?
Home office equipment
As long as your office equipment is not paid for by your employer, you can claim the declining value of laptops, computers, printers, mobile phones and even kit-set office furniture, such as computer desks, office chairs and extra lighting.
Using the fixed-rate method, you can claim for any items over $300. You cannot claim on depreciating equipment or any other expenses if you use the shortcut method which entitles you to claim 80 cents for every hour worked from home.
Office consumables
Keep receipts for all your office consumables, such as printer ink, pens, papers, year planners and diaries, as you can claim on these if you use them as part of your job role.
Self-education courses
You can claim self-education courses as long as it results in a formal qualification that relates to your chosen career.
For example, if you are a vet and complete a photography course so you can become a world-renowned photographer, then this wouldn’t be tax-deductible. If you were to specialise in a degree in dog psychology to add another service to your vet clinic, then this would be deductible.
Electricity, internet and mobile phone
If you are not using the shortcut method to calculate your deductions, you can claim on the portion of lighting, heating, cooling, phone calls and Wi-Fi related to work.
Bring copies of your household bills to your tax appointment and your financial consultant can help you work this out.
Cleaning your office space
Many people don’t realise they can claim on the cleaning of their dedicated workspace. Keep in mind, though, it is proportional to the size of your at-home office.
For example, if you hire a house cleaner, you can only deduct the amount to clean your home office, not the family home.
What can’t you claim on tax when working from home?
While we wish we could, employees working from home are unable to claim the following:
- Laundry costs. Be aware you’re likely to draw attention from the ATO if you are working from home and trying to claim for the cost of laundering your work uniform.
- Morning and afternoon tea supplies or lunches.
- Mortgage or rent — unless you run a small business or are a sole trader.
- Anything that your employer compensates or reimburses you for. For example, if your boss gives you money to help with the cost of the internet.
- Costs related to your children’s homeschooling, such as laptops, digital devices.
- Hours that you don’t work, such as lunch breaks, sick days or days that you are in the office.
- Time spent home-schooling your children.
Gerry Incollingo is the MD of LCI Partners, a firm that specialises in accounting advisory, lending, wealth, property, insurance and legal.
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