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80 cents per hour tax shortcut: Am I eligible, how does it work and how do I claim it?

As the COVID-19 pandemic forces many non-essential workers to work from home, the Australian Tax Office has announced new working from home expense rules.

The ATO has rolled out a new working from home shortcut for anyone who has been working at home since March 1, because of measures to slow the spread of the coronavirus.

Listen: What four Australian healthcare workers want you to know about COVID-19.

Here’s what you need to know before tax time rolls around.

What is the 80 cents per hour shortcut?

Instead of having to calculate costs for specific running expenses, such as the proportion of internet time used for work or entertainment, employees can claim a flat 80 cents per hour worked at home.

The special new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, instead of calculating costs for specific running expenses as taxpayers would under normal circumstances.

People can still use the old method of calculating proportion of use and depreciation if they prefer.

The new arrangement is only in place between March 1 and June 30, but the tax office will keep an eye on the coronavirus situation and decide if it should continue into the next financial year.

Who can claim the 80 cents per hour shortcut?

You can claim a deduction of 80 cents for each hour you work from home due to COVID-19, as long as you are working from home to fulfil your employment duties.

This means if you are only carrying out minimal tasks such as occasionally checking emails or taking calls, you are not eligible.

You must be incurring additional deductible running expenses as a result of working from home.

You do not need to have a dedicated area of your home set aside for working, such as a desk or private study.

What can I claim the 80 cents per hour shortcut on?

To claim a deduction for working from home, all of the following ‘golden rules’ must apply:

  • You must have spent the money
  • The expense must be directly related to earning your income
  • You must have a record to prove it

The flat 80 cents per hour shortcut can be applied to the additional running expenses you incur while working from home.

These include:

  • Electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
  • Cleaning costs for a dedicated work area
  • Phone and internet expenses
  • Computer consumables (for example, printer paper and ink)
  • Stationery
  • The decline in value and repair of capital items, such as home office furniture and furnishings
  • The decline in value of a computer, laptop or similar device

If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the above expenses.

What can I not claim?

You cannot claim items like coffee, tea and toilet paper which used to be supplied by employers to employees in the office.

You also cannot claim items like children’s education expenses, or your rent or mortgage.

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What records must I keep to claim the 80 cents per hour shortcut?

The ATO has relaxed its required records for those claiming the 80 cents per hour shortcut.

If you use the shortcut method, you only need to keep a record of the hours you worked at home from March 1.

Timesheets or diary notes are sufficient.

Assistant Commissioner Karen Foat said the shortcut was aiming to make it easier for those working from home for the first time.

“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” she said.

“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.

“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim.”

Can I still claim working from home deductions using other arrangements?

Yes. The 80 cents per hour shortcut aims to simplify claims, but it does not stop people from making a working from home claim under the existing arrangements, which includes calculating all or part of your running expenses.

This includes claiming a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculating the work-related portion of expenses like your phone and internet bills, computer consumables, stationery and the decline in value of a computer, laptop or similar device or claiming the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis as normally required.

These will be trickier to calculate, as taxpayers will need to apportion their use between what is personal and what is work-related.

Claims for working from home before March 1 cannot be calculated using the shortcut method.

The ATO has indicated it will likely extend the new claiming method into the next financial year if restrictions and social distancing measures extend beyond June 30.

Read more:

To protect yourself and the community from COVID-19, keep at least 1.5 metres away from other people, regularly wash your hands and avoid touching your face.
If you are sick and believe you have symptoms of COVID-19, call your GP ahead of time to book an appointment. Or call the national Coronavirus Health Information Line for advice on 1800 020 080. If you are experiencing a medical emergency, call 000.

To keep up to date with the latest information, please visit the Department of Health website.

Feature image: Getty.

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