Working from home during COVID-19? Here’s what you need to know about the ATO’s new tax shortcuts
There’s a lot going on right now. While we’re all here balancing important things like work (or lack of) with equally important activities like learning the ukulele and circulating Tiger King memes, it probably hasn’t crossed your busy mind that the end of the financial year is looming and it’s almost tax time. Right now, a sizeable portion of Australians are working from home for the very first time – so, what happens come June 30? What expenses can we actually claim? How on earth do we calculate it? Wipe those sweaty palms dry, folks – tax time is going to be a lot easier than you think.
These are unprecedented times, so to streamline what would normally be a highly regulated process, the Australian Taxation Office is temporarily accepting a simplified method of calculating for expenses and deductions from those of us forced to work from home during COVID-19. This nifty new arrangement is called the ‘shortcut method’ and it allows you to claim a flat rate of 80 cents per work hour, rather than needing to calculate costs for specific running expenses. If you claim under this method, all you need to do is keep a record of the hours you worked from home (from March 1 to June 30) as evidence of your claim – timesheets, diary notes or rosters are acceptable.
So, who is eligible to use this shortcut method? According to the ATO, you’re able to claim this deduction of 80 cents for each hour you work from home due to COVID-19 as long as you’re working from home to fulfil your employment duties (not just carrying out minimal tasks like checking emails or taking calls) and you are actually incurring additional deductible running expenses as a result of working from home. The rate offered under the shortcut method covers all deductible running expenses such as electricity, cleaning expenses, phone costs, internet, stationery and computer consumables like printer ink – while you don’t have to incur all of these expenses, you must have incurred additional expenses in some of these categories as a result of working from home due to COVID-19. If you have roommates and family working under the same roof, you can each claim the 80-cents-per-hour rate individually.
Claiming under the shortcut method is optional – you can still use the existing fixed-rate or actual-cost methods (which are a little more complicated), however those who are working from home for the first time, and are understandably a little green when it comes to claiming under these circumstances, are encouraged to utilise this temporary arrangement. It’s probably the only time the ATO will ever encourage you to take shortcuts on your tax return – so make the most of it.
This temporary tax shortcut only applies for the period from March 1 to June 30, 2020. Though, the ATO will review the end date as the pandemic progresses, which will determine if the shortcut method applies again in the next financial year. For more information, head to the ATO website.