The Covid-19 shutdown has forced many Australians to relocate into their home office. As a result, there will be an increase in related expenses that can be claimed as a tax deduction.
The ATO has announced the new work from home short cut method of claiming tax deductions to make it easier for people to manage.
Short cut method
The new arrangement allows people to claim a rate of 80c per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.
Multiple people living in the same house can claim this new rate and there is no requirement to have a dedicated work from home area.
Workers will only need to keep a record of the number of hours worked from home.
Methods used to claim for the entire year
The new short cut method is available from 1st March 2020 and for running expenses prior to 1st March 2020 you can refer to two ways of calculating your running expenses:
- You can claim a fixed rate of 52c per hour
- You can calculate your actual expenses
Workers may claim deductions based on money they have spent on expenses directly related to earning income. Workers must keep a record to prove it.
Conclusion
Due to the sudden influx of people working from home, the ATO’s new short cut method aims to ease the process of claiming working from home expenses for first timers. Workers must only take note of the hours they work and receive an 80c per hour tax reduction. This option is recommended for individuals working from home for the first time.
Let Us Help
If your business has a turnover of over $1 million, ABJ Solutions is offering a complimentary 30 minute Zoom meeting to help answer questions and model critical decisions with you. Get in touch with us today so that we can help guide you through this challenging time.
