COVID-19: Home Office Expenses

August 2020

As more of us are expected to work from home, setting up a home office incurs some expenses. We breakdown what you can claim and how.

In general, claiming home office expenses are designed for those who run their business out of home, however as employees are continuing to work from home, there are numerous questions about what you can claim – or not – by setting up your home-based workspace.

If you are merely working from home and not running a business at home, then it's unlikely you will be able to claim occupancy expenses such as mortgage interest or rent. Keep in mind that if you claim occupancy costs, this will impact on your access to the CGT main residence exemption. 

An example: What can or can't you claim?

Let's take a recent example of someone who has set up a home office. Due to working from home full-time, they hav set up an office with the following items: paintings, plants, a desk, computer equipment, a water tower and a sculpture. Other cost incurred include mortgage payments and running costs.

Assuming that everything is claimable as an expense is risky.  The water cooler is unlikely to be deductible as food and drink is considered to be private in nature. The items that beautify your office will generally only be deductible if they are displayed in open viewing areas in premises used for income producing purposes including reception areas, waiting rooms and foyers.

How to make your claim(s)

If you are working from home and have set up a home office for this purpose, you can claim a deduction for your expenses, but there are different methods you can use.

The actual method is the usual approach to calculating work from home expenses, which is 52 cents per hour excluding phone, internet, depreciation on equipment, but includes depreciation on furnishings plus electricity and gas.

Acknowledging that more people would be working from home during the COVID pandemic, the ATO announced an 80 cents per hour worked method for claiming work-from-home deductions. The  80 cents per hour method includes phone, internet, depreciation on furnishings and equipment, electricity and gas. This method is available from 30 March to 30 September.

Clients will often be better off using the actual method for many expenses, however it's not always the case. For example, the 80 cent per hour method can produce a worse result unless your employer pays for your internet and phone costs.

Seek advice from your accountant

Rather than assuming your expenses are deductible or which method is best for your situation, it's worth a conversation with your accountant to ensure that what you're claiming is both eligible and claimed in the right way. Contact us on 02 9957 4033 or send your query via email for more guidance.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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