Working from home has become almost a normal thing due to the pandemic. Apart from the benefits that you get here in terms of comfort and flexibility, there are some other benefits as well. Being aware of the working from home tax deductions that your country offers is financially smart to do.
In order to give you a clear idea about it, we are with a perfect list. This list will inform you about all the essential work from home tax deductions – note this is for Australia only.
Let us talk about the eligibility first
Knowing your eligibility is a must before you proceed. Here is a list of situations in which you will be eligible for claiming those deductions in Australia. You can claim the deductions only if
- Your overall expenses are on the rise because you are working from home.
- you are working from home to fulfil your duties as an employee. In case you do minimal things like checking essential messages that you get via emails or something like that, you won’t be eligible for it.
In Australia, people may claim the expenses caused by the facilities that you are using inside of your home. But you can claim the expenses of facilities that are somehow associated with the work that you are doing for your employer.
Here is a list to help you with that.
- You can claim the expenses for items that are declining in terms of value because you use them for your employer’s work i.e. furniture, PC, etc.
- Your additional phone and internet expenses fall under this category as well.
- The expenses incurred for electricity when you cool, heat, or avail other facilities that use electricity can be claimed as well.
We have seen some people asking whether they get occupancy expenses. Getting those expenses from the government is possible only under specific circumstances. These are a few to have a look at.
- If you are working from in general like the majority of people, you won’t get the occupancy claims.
- In case someone is working from home because his/her employer is not providing an alternative to the office to work from, you may claim the occupancy expenses incurred on your behalf.
- Even if someone is using a place solely for working and not for any other purposes, he/she is eligible for such deductions.
Note: When you claim for the depreciating value of your asset, you need to keep a few points in your mind. First, you must keep the records for 5 years after you have made the claims. You must also show the process via which you calculated the decline in value of the asset. Along with these, you also need the depreciation schedule and the purchase receipt of the asset.
Australian tax deductions list
Requirements for working from home tax deductions
Whenever you are making such claims, you will be asked for documents to prove your claims. The deductions that we are talking about here will need you to present receipts in the majority of cases. But remember the receipts should refer to the money that you have spent but have not been reimbursed. Apart from that, these expenses need to be directly related to your process of earning money i.e. working for your employer. There is no other way to prove it apart from presenting receipts.
You might have collected a lot of receipts but the deduction will be provided only in those cases where your expenses relate directly to your work. Whenever the amount of deductions is more than $300, a piece of written evidence to prove this claim is a must. Talking about the format of the records you are keeping, they may be paper-based or digital copies as well.
All that matters here is keeping the authentic record not a photocopy or image of the receipt. The information that needs to be present on the receipts includes the date on which these expenses were paid, the amount of money you spend along with the name of the supplier.
Methods of applying for these claims
The Australian Tax Office (ATO) provides two methods to claim such deductions. These two methods are for different situations. Take a brief look at each of them so that you may choose the suitable one for you.
Earlier there used to be three methods but the Shortcut method was valid till June 30 2022 only.
The actual cost method
This method lets people get working from home tax deductions based on the extra expenses they incur for earning (by working from their homes). The expenses covered by this method include cleaning expenses, the decline in value (assets), phone and internet usage expenses, etc.
Anyone would be able to get these deductions only if they are using a dedicated area inside their homes to work. If the area is used for other purposes along the office work, the individual will be able to get the additional running expenses only.
Fixed-rate method
This method lets individuals get 52 cents for every hour that people work from home. Apart from the 52 cents, you can also claim for the expenses that are not covered by this fixed rate method. You must have records of the expenses to prove the additional expenses.
You may easily get phone and internet expenses for working from home. The common expenses covered by this method include
- Cleaning expenses of your home office.
- Expenses incurred as a result of the following facilities i.e. lights, cooling, and heating.
- Cost for the decline in the quality or value of furniture used in your home office.
Working from home tax deductions
Getting the working from home tax deductions that you deserve is really easy if you are aware of the rules and expectations. We hope this article helped you get familiar with the ways you can get it in Australia.
As the rules are changing very often due to changing situations around the world, keep an eye on the latest information from the government.