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Tax tips: Can I claim my onesie?

1 July 2020

What you need to know about tax claims when you’ve been working from home.

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No, you can’t claim your onesie on your tax return, even if you spent the first half of 2020 wearing it on video calls.

But with the majority of the Australian workforce suddenly being asked to work from home this financial year, it’s true that there will definitely be changes to the impending tax season.

Although your commuting costs may have been cut, having a home office still comes with its own list of unavoidable expenses. According to the ATO, here are all the things you can claim for your snazzy new laptop spot - as long as your employer hasn’t given you an allowance for these or reimbursed you for the expense:

  • Electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work Phone and internet expenses
  • Computer consumables (for example, printer paper and ink) and stationery 
  • Cleaning expenses for your home study
  • Technology or furnishings, including furniture (note: you can claim either the full cost of items up to $300 or the decline in value for items over $300)

Those who run their businesses from home will know that it can be tricky to work out exactly what percentage of your overall household bill you can claim to be work-related. But the Australian Tax Office (ATO) has made things easier this year…

Who doesn’t love a shortcut?

This year in 2020, the ATO has implemented a temporary alternative to the ordinary methods for claiming working from home expenses.  They call this new option the “shortcut method,” and it allows employees who have been fulfilling their proper employment duties at home to claim 80c for every work hour spent in your own four walls between 1 March 2020 and 30 June 2020. If the lockdowns live on, they may extend this period.

Instead of having to work every expense out manually, the shortcut method covers all the above items, plus any additional decline in value of household items from unexpected use. All you have to do is keep a record of your hours.

For example, say you’ve worked from home 5 days a week for 14 weeks, 8 hours a day. That’s a total of 560 hours. So you can claim: 80c x 560hrs = $448.

If you had been working from home consistently before 1st March 2020, then you may need to use the old ‘Fixed Rate’ method using a 52c per work hour calculation. This is a more complex way to figure out your claim, but you’ll have to calculate what proportion of your utilities usage was work-related and any depreciation of assets such as office furniture in your claim.

Don’t forget - the shortcut method replaces other methods for claiming home office costs, so you won’t be able to manually claim any other working from home expenses if you choose to go down this route. It was designed to make the overall calculation easier this year (and make it less likely tax auditors will need to work overtime chasing poor calculations), instead of having to work out individual costs for each item or utility.

You can choose which method to use based on which will give you the best financial outcome – just so long as you have kept a record of everything.

For more detailed information, please see the information on the ATO Website.

We can’t have everything

The ATO is unfortunately not yet sympathetic to the workforce’s caffeine addictions. You can’t claim your coffee or tea - even if they’re things your employer used to provide. Even if they’re the only reason you’re awake and reading this.

You also can’t claim:

  • General household items, like toilet paper or milk
  • Your rent or mortgage
  • Incidental expenses, like time spent on lunch breaks
  • Equipment used to set your children up for online learning, including iPads or laptops
  • Anything your employer has already reimbursed you for

If you’re unsure, seek advice

No one likes an audit, or a missed opportunity. If you’ve got an accountant, they’re likely to be well-versed in the new rules. But if this is your first year working from home and you’re doing your tax yourself, make sure you do some research or seek some advice to make sure you’re doing things correctly, and to avoid missing out on a few extra dollars at the end of the financial year.

Whatever you choose, remember that keeping a written record of all expenses and income is imperative – every financial year, not just this one.

 Hot tip

If you’re not great at storing receipts, take a photo so you have it on your phone. Another option is to pay for all of your claimable work expenses on your card so that your statement can act as a record for you.

Otherwise, keep your receipts like they’re love letters, and log your hours like they’re gold.

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The information set out above is general in nature and has been prepared without taking into account your objectives, financial situation or needs.  Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations.  You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.