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

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 working out your expenses?

One easy rule to bear in mind is that there must be a clear link between something you’ve bought and your work duties. In other words, if your claim is refused, will you be able to convince that these expenses relate to your work duties, and do you have supporting records like receipts?

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

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

You also can’t claim council rates and interest on your home loan.

However, you can claim internet usage as a working from home expense but it 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 maximize your return, you’ll have to do the maths or choose the easier way - having your tax agent do it for you.

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