Home Office Expenses
As an employee working from home, you can claim a deduction for expenses that you incur in relation to this work. This includes running expenses such as:
• Electricity & gas (for heating, cooling & lighting)
• Phone & internet
• Paper, ink & stationery
• Depreciation of plant & equipment and office furniture
The expenses that you cannot claim for, as an employee working from home, are:
• Rent
• Rates & Water
• Interest on your home loan
• Milk, tea, coffee & other general household items
To work out your deduction, there are three methods you can choose from:
1. Shortcut Method (only available for the period 1 March – 30 June 2020)
2. Fixed Rate Method
3. Actual Cost Method
Shortcut Method
This method was introduced due to the Coronavirus and is only available for the last third of the 2020 financial year (1 March – 30 June 2020). It is available for every employee that was required to work from home and additional running expenses were incurred as a result of this work. The shortcut method can be used for multiple people in the same household that are working from home, even if you were already working from home before Coronavirus.
A rate of 80 cents per hour is claimable for every hour you worked from home between 1 March and 30 June 2020. This rate covers all running expenses, therefore if you choose to use this method, then you cannot claim any other expenses incurred as a result of working from home.
You are not required to have a dedicated work area or office in your home, but you must keep track of the hours that you worked, whether that be through the use of a diary, timesheets or a roster. You must exclude any time that you took a break from working (e.g. lunch break). If you worked from home prior to 1 March 2020, then you must use the remaining two methods for the period 1 July 2019
to 29 February 2020.
Fixed Rate Method
The fixed rate method allows you to claim a deduction of 52 cents per hour, for each hour you work from home, and you incur additional running expenses because of this work. The fixed rate covers all expenses for:
• Electricity & gas (for heating, cooling & lighting)
• Depreciation of office furniture & furnishings
• Cost of repairs to home office equipment, furniture & furnishings
To support your claim under the fixed rate method, you must have records for either of the following:
• Your actual hours that you worked from home throughout the year
• A diary representing a 4-week period to show your usual hours of working from home
In contrast to the shortcut method, to claim the fixed rate method, you must have a dedicated work area, such as a home office.
The fixed rate method does not include a claim for the following; therefore, these expenses will
require a separate calculation:
• Phone & internet
• Paper, ink & stationery
• Depreciation of equipment – phones, computers & laptops
Actual Cost Method
As the name suggests, this method allows you to claim the cost of the direct expense you have incurred because of working from home and includes the following:
• Electricity & gas (for heating, cooling & lighting)
• Depreciation of office furniture & furnishings
• Depreciation of equipment – phones, computers & laptops
• Phone & internet
• Paper, ink & stationery
You must be able to back up your claim with records, such as:
• A record of the number of hours you worked from home during the year
• A diary representing a 4-week period to show your usual hours of working from home
• Receipts for any depreciating assets and the percentage the asset was used for work
• Work out the cost of heating through:
o Cost per unit of power used (within bill)
o Average units used per hour (power consumption per kilowatt hour for each
appliance, equipment or light used)
o Total annual hours worked (per diary/record)
• Cost of phone and/or internet plan (see computer, phone, or another electronic device article)
• Receipts for expenses such as:
o Paper
o Ink
o Stationery
You must consider whether you share your workspace with other household members and if you do, you must apportion your expense claim to reflect this. If you do not have a separately identifiable work area, that is, you use a common area, such as the lounge room or the kitchen table, the additional running expenses would be considered very minimal.
