How working from home impacts your tax deductions

Money
Temporary shortcut method available for FY21 tax returns.
Young woman working from home on laptop.

With many people continuing to work from home, the Australian Taxation Office (ATO) has announced that the “temporary shortcut method” would be available to those claiming working from home deductions in their FY21 tax return.

The shortcut method was created at the height of the pandemic last year to respond to the sudden influx of makeshift home workspaces.

The working from home shortcut method allows claims at the all-inclusive rate of 80 cents per hour, rather than needing to do complex calculations for specific items.

Assistant Commissioner Tim Loh said the shortcut method would make claiming working from home expenses easier for many people.

“Even with people shifting back to the office, we know many Australians have opted to continue working from home at least one day a week,” Mr Loh said.

“The shortcut method is straightforward; just multiply the hours worked at home by 80 cents.

“The only proof you need is a record of the number of hours you’ve worked from home, such as a timesheet.”

The shortcut method can be claimed by multiple people living under the same roof and, unlike existing methods, does not require a dedicated work area.

Mr Loh said taxpayers could also choose to use the fixed-rate or actual cost methods to claim working from home expenses. 

If you decide to go with an existing method, I would encourage you to do your research and keep good records,” he said.

“Keeping track of each individual expense and calculating the work-related use of each one can be fiddly, so be organised. 

“So, make sure you’ve read the guidance on our website or chat to your registered tax agent.”

To claim a work-related expense:

  • You must have spent the money yourself and not been reimbursed.
  • The expense must be directly related to earning income.
  • You must have kept any necessary records such as receipts.
  • More information on claiming working from home expenses is available on the ATO website.

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs.  Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.

Related topics

  • The information in this article has been prepared for general information purposes only and is not intended as legal advice or specific advice to any particular person. Any advice contained in the document is general advice, not intended as legal advice or professional advice and does not take into account any person’s particular circumstances. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives and needs.

    Insurance products (excluding Travel Insurance) are issued by RACQ Insurance Limited ABN 50 009 704 152 (RACQ). Conditions, limits and exclusions apply. This is general advice only and may not be right for you. This information does not take your personal objectives, circumstances or needs into account. Read the PDS and any applicable Supplementary PDS before making a purchase decision on this product. You can also access our Target Market Determinations on this website.

    Banking and loan products issued by Members Banking Group Limited ABN 83 087 651 054 AFSL/Australian credit licence 241195 trading as RACQ Bank. Terms, conditions, fees, charges and lending policies apply. This is general advice only and may not be right for you. This information does not take your personal objectives, circumstances or needs into account. Read the disclosure documents for your selected product or service, including the Financial Services Guide and the Terms and Conditions, and consider if appropriate for you before deciding.

    Except for RACQ Bank, any RACQ entity referred to on this page is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Cth). That entity’s obligations do not represent deposits or other liabilities of RACQ Bank. RACQ Bank does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.

    RACQ Operations Pty Ltd (ABN 80 009 663 414 AR 000234978) and Members Travel Group Pty Ltd (ABN 45 144 538 803 AR 000432492) are acting as an Authorised Representative of the issuer of the insurance, Tokio Marine & Nichido Fire Insurance Co., Ltd. (ABN 80 000 438 291 AFSL 246 548). Any advice set out above is general in nature only, and does not take into account your objectives, financial situation or needs. Before purchasing any travel products, please consider the RACQ Travel Insurance Product Disclosure Statement (PDS) and the Target Market Determinations (TMDs) that apply to these products. Whilst the PDS outlines the Terms and Conditions of these products, the TMDs outline the intended class of customers that comprise the target market for these travel products. This will allow you to consider which products best suit your objectives, financial situation and needs and consider the products appropriateness to your personal circumstances. TMDs also outline matters involving the distribution and the review of these products. The PDS, Supplementary PDS and TMDs for each travel product can be found here.