Home-based business – Part 4
Shortcut method
The ATO have introduced a shortcut method to simplify how you calculate your deduction for working from home. This method is temporary and only available for the period 1 March to 30 June 2020. All employees working from home in this period can use this method. Using this method, you can claim 80 cents per hour for each hour you work from home during the period 1 March to 30 June 2020.
You can choose to use this rate if you:
- are working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls
- have incurred additional running expenses as a result of working from home.
The shortcut method covers all of your work from home expenses, such as:
- phone expenses
- internet expenses
- the decline in value of equipment and furniture
- electricity and gas for heating, cooling and lighting.
If you use this method, you can’t claim any other expenses for working from home.
You don’t need to have a dedicated work area to use this method.
However, you must keep a record of the number of hours you have worked from home. This could be a timesheet, roster, a diary or documents that set out the hours you worked from home.
You don’t have to use the shortcut method, you can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome as long as you meet the working criteria and record keeping requirements for each method.
If you had a work from home arrangement before 1 March 2020, you will need to use one of the existing methods to calculate your deduction for the period 1 July 2019 to 29 February 2020.
Fixed rate method
You can claim a deduction of 52 cents for each hour you work from home for the work-related expenses you incur for additional running expenses. The fixed rate covers all expenses you incur for:
- the decline in value of home office furniture and furnishings – for example, a desk
- electricity and gas for heating, cooling and lighting
- the cost of repairs to your home office equipment, furniture and furnishings.
To claim using this method, you must keep records of either:
- your actual hours spent working at home for the year
- a diary for a representative four-week period to show your usual pattern of working at home.
You can apply the four-week representative period across the remainder of the year to determine your full deduction amount. However, if your work pattern changes you will need to create a new record.
To use this method, you need to have a dedicated work area, such as a home office when you work from home.
This method doesn’t include the following, so you will need to separately calculate your work-related use for:
- phone expenses
- internet expenses
- computer consumables and stationery – such as ink
- decline in value of equipment – such as phones, computers and laptops.
To claim the work-related portion of these expenses you must have records such as:
- receipts or other written evidence that shows the amount spent on expenses and depreciating assets you purchased
- phone accounts identifying your work-related calls and private calls to work out your percentage of work-related use for a representative period
- a diary that shows
- a representative four-week period of your usual pattern of working at home
- any small expenses ($10 or less) that you can’t get a receipt for totalling no more than $200
- your work-related internet uses
