How To Maximise Your Work From Home Tax Deductions

June 29 2020

Written by Ben Crow, COO at WLTH Finance Tracker

With the end of the financial year only a few days away, it is almost time to start submitting your tax for 2019/2020 and it is now more important than ever to understand exactly what you are able to claim, especially considering 46% of the Australian workforce has been working from home since the start of the global Coronavirus pandemic.

Although there are a number of benefits working from home and has provided a new perspective on work/life balance for a number of Australians, one of the side effects is the costs.

Due to the implementation of a nationwide lockdown, many Australians were forced to work from home and possibly outlay funds to set up a home office to maintain the same level of efficiency they operated in the office.

These expenses can add up very quickly when you look at a desk, monitor, new chair and new technology subscriptions but the silver lining is that you will be able to claim many of these expenses incurred working from home as tax deductions.

Due to the number of Australians working from home since the start of Covid-19, the ATO has introduced a number of new rules to make claiming tax deductions easier.

Deductions can be from a number of different expenses but generally speaking need to be directly related to earning an income. According to the Australian Tax Office, items that are generally tax deductible include:

  • Work Expenses
  • Gifts and Donations
  • Personal Super Contributions
  • Cost of managing tax

There are now three ways to claim work related expenses including the new option, the shortcut method.

The Shortcut Method - This will allow people to claim a rate of 80c/ hr for all their running expenses, rather than needing to calculate costs for specific running expenses.

  • Multiple people in the same household can claim this flat rate
  • You don’t need to have a dedicated WFH area - this rule has been put in place to accommodate for people having to make last-minute arrangements
  • Claims cannot be made using this method prior to March 1, 2020

The Fixed-rate Method - This option was generally the go-to option before Coronavirus and may generate a bigger deduction. This will allow you to claim 52 cents for each hour you work from home for the work-related expenses you incur.

  • This fixed-rate covers expenses incurred for the decline in value of home office furniture
  • Electricity and gas for lighting, heating and cooling
  • Cost of repairs for work related expenses

The Actual Cost Method - This can result in a much bigger return but requires a lot more record keeping. With the actual cost method you can claim the additional running costs that are directly incurred from working from home. These include:

  • Electricity and gas
  • Decline in the value of home office furniture and furnishings
  • Decline in the value of work devices such as laptops and phones
  • Phone expenses
  • Internet costs
  • Cleaning costs

With everything that has happened this year, it is important to work out which of the options work best for you and start looking back through your expenses to make sure you don’t miss out on the opportunity to claim back some of the costs incurred during this already difficult period.

The WLTH Finance Tracker has a number of features that will help you simplify the end of financial year and get the most out of your tax return each year.

  • Bank Feeds: Inside the platform you are able to track and manage your expenses from across multiple accounts and multiple institutions in one place!
  • You will be able to simplify tax time by allocating tax tags to your deductible items throughout the year. This will save time spent with your accountant and remove a huge amount of stress at the end of financial year.
  • Track your deductible items throughout the year so you can track exactly how much you will be owed at the end of the financial year.
  • Our bank feeds mean that you will no longer need to manually update a spreadsheet!

Sign up to WLTH Finance Tracker today and remove all the stress associated with tax time today! Take control of your finances and simplify how you do your tax!

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