by Dave Johnson B.ComC.A
Doesn’t time seem to pass quickly; I can’t believe tax time is just around the corner again!
COVID-19 has not only impacted all of our lives immeasurably but its impact has also encroached on the tax arena. With many people now required to work from home, the ATO has introduced a special deduction for the period from 1 March to 30 June 2020 for claiming home office expenses. The deduction may well be extended partly into the 2021 tax year as well.
For the above period, employees can claim a simplified $0.80 per hour for each hour they are required to work from home as part of their employment, provided they can justify the time by means of suitable records, for example: timesheets. Actual time spent ‘at work’ is what counts, a one-hour lunch break at home is obviously not included!
The previous method of $0.52 per hour, or alternatively the actual cost method, continues to apply for the first eight months of the year.
It will be in the interests of employees to calculate their relevant home office work-related deduction under the three available methods and ascertain which yields the highest available deduction. For example, in the absence of keeping accurate records for incremental costs such as electricity (a fairly onerous calculation) the best result, subject to the comments in the next paragraph, might arise by using $0.52 for the first eight months and $0.80 for the final four months.
However, it is important to remember that for the $0.52 per hour claim, there must be a separate designated area for home office use, not merely the kitchen table or lounge chair. This criterion doesn’t apply for the COVID-19 hourly rate from March to June. Also note that the $0.80 per hour rate is an all-inclusive rate and additional costs for say phone calls, internet usage, decline in value of your laptop etc. cannot be separately claimed. This is not the case with the $0.52 per hour claim, and that is why this method could in fact give a higher deduction for the March to June period provided you can properly substantiate the claims. Of course, any costs that are reimbursed by your employer are not relevant.
It is worth doing the calculations to see which method yields the highest result. Let’s say this takes an hour but results in a $300 higher deduction. For many people that might equate to a very brief rate of pay in excess of $100 per hour!
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