Finance Your Budget What you can (and can’t) claim on your home office at tax time

What you can (and can’t) claim on your home office at tax time

home office tax
Getting your tax return right for your home office could save you thousands. Photo: TND
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Your undies and pet dog are off limits, okay?

It’s almost tax time and many of us have been working from home for well over a year.

So what can and can’t you claim when it comes to work your expenses?

Accountant Kelly Jenkins (no relation to the author) said there must be a clear link between something you’ve bought and your work duties.

In other words, don’t be like one of Ms Jenkin’s clients, who has an online business and wanted to claim his pet dog on the basis that it was guarding his home.

Um, no.

Another client was convinced laundering his underwear would also pass the test.

Sorry, but unless your undies have a work logo on them or are classified as safety gear, no can do.

Ms Jenkins suggested imagining you are sitting across from a tax office representative who has just refused your claim.

Can you convince them of the link to your work duties, and do you have supporting records like receipts?

“You can’t claim for household items, so you can’t have tea, coffee, milk – that sort of stuff, you just can’t have it,” Ms Jenkins said.

“Working from home is not like when you go to work and the business can claim the tea and bikkies.

There is a big distinction between private costs to work and 99 per cent of what’s in your house, [which] will be private.”

Home office tax: What you can and can’t claim

Any equipment children used while studying from home, like iPads for example, are also off limits.

You also can’t claim council rates and interest on your home loan, Ms Jenkins said.

“That’s a big, big no-no because you will open your own home up for capital gains tax if you try and claim that,” she said.

“Some people will try and put landscaping or gardening and all sorts of stuff just because they’ve had to work from home.”

Ms Jenkins said you can claim internet usage as a working from home expense but is has to be a reasonable portion.

To get a rough idea, you can think about how many people in your home use the computer and your usage share.

Then, consider what portion of your usage is for work and what would fall into the personal category, like social media or online shopping.

If you purchase additional equipment specifically for work, like office supplies or equipment, then you can also claim those expenses.

There are three different ways you can use to claim working from home expenses: the shortcut method, fixed rate method and actual cost method.

Shortcut method

You can claim 80 cents per hour that you worked from home between March 1 to June 30, 2020 and for the 2020-21 financial year.

It covers all work expenses like phone, internet and electricity, but if you choose to use this method you can’t claim any other expenses for working from home.

You don’t need to have a dedicated home office area but you must have a record of hours worked from home – for example, timesheets, rosters or diary entries.

Fixed rate method

You can claim 52 cents per hour that you worked from home and this includes electricity and gas for heating, cooling and lighting, the decline in value for home office furniture like a desk and any repair costs for home office equipment or furnishings.

It doesn’t include phone, internet and stationery, so these can be claimed separately.

If you use this method you have to have records for hours you spent working from home or a four-week diary showing your usual working from home pattern.

Actual cost method

You can claim a deduction for working from home expenses, including electricity and gas, drop in value for office equipment and phones or computers, phone and internet expenses, stationery and cleaning (if you have a dedicated home office).

To work out the best method to maximise your return, you’ll have to do the maths or ask an accountant.

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