How working from home impacts your tax deductions

Temporary shortcut method available for FY21 tax returns.

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.

DIY TAX RETURN TIPS

FOUR THINGS TO DO BEFORE 30 JUNE TO TAKE CONTROL OF YOUR FINANCES

THE TAX APPS YOU NEED TO DOWNLOAD

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.