Thinking | 15 April 2020

COVID-19 and claiming working from home deductions: new shortcut method

By Peter Murray, Rachel Law and Bradley White

The Australian Tax Office has released a new shortcut method to calculate working from home deductions for the 1 March to 30 June 2020 period. This is in addition to the existing fixed rate and actual cost methods.

What are the existing methods?

The fixed rate method allows you to calculate the running costs as being $0.52 per hour of work at home. This will include your heating, cooling, lighting, cleaning and the decline in value of furniture and fittings to the extent they are used for work purposes.

The actual costs method requires you to work out the running expenses that you incur due to working from home. This is done by recording the amounts in a diary over a four-week period.

Both of these methods require you to claim on an actual cost basis for phone and internet expenses, computer consumables, stationery and depreciation on work equipment to the extent that they are used for work-related purposes.

For more details on these methods, please see our recent article What deductions can you claim if you are self-isolating and working from home during COVID-19.

What is the shortcut method?

The new shortcut method allows you to claim a rate of $0.80 per hour of work at home for all additional running expenses incurred. Unlike the fixed rate method, this shortcut rate includes phone and internet costs, computer consumables, stationery and the decline in value of a computer or similar device.

The shortcut method does not require you to have a dedicated work area at home and multiple people living in the same house can individually claim the $0.80 per hour deduction. Unlike the other methods, which require a logbook to be kept, the only evidence needed for this method is a record of hours worked from home.

As the shortcut method is only available from 1 March 2020, taxpayers will need to rely on the actual method or fixed rate method ($0.52 per hour) for any working from home expenses before that date.

Contact

Peter Murray

Peter is the section leader of the firm's Tax team. Peter has joined Hall & Wilcox in 2016 after...

Rachel Law

Rachel is a tax lawyer specialising in direct taxes and tax disputes. Rachel’s areas of experience include advising on...

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