If you are starting the year off working from home, then you should start keeping track of your hours and expenses, to prepare for tax time later in the year.
There are three ways of calculating home office expenses depending on your circumstances. The methods are the:
- Shortcut method (80 cents per work hour)
- Fixed rate method (52 cents per work hour)
- Actual cost method
Shortcut method
This is a temporary method, applicable for the 2020-21 and 2021-22 income years. You can claim a deduction of 80 cents for each hour you worked from home.
If you:
- were working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
- incurred additional running expenses as a result of working from home.
The shortcut method does not require you to have a dedicated work area, such as a private study.
If you wish to use the other two methods, you must have a dedicated workspace (you can’t just work from your laptop in the kitchen). You can find more information about the Fixed rate method and Actual cost method on the ATO website. Whichever you choose, some of the things that you can’t claim include:
- housing or rental costs
- general household items – coffee, tea, cookies, milk
- expenses related to childcare or children’s education
- anything that has been paid directly or reimbursed to you by your employer – eg. Laptop, phone, monitors, speakers etc.
If you have any questions or need some extra help with your finances, please contact us on 03 9886 0800 or via email.
What should you do now?
Become Money Smart
Build your financial knowledge and join our online community where you will receive TAG updates and invites to our Information Sessions.
Meet with us
If you would like to discuss the future of your business further, contact us to arrange a time.
Wealth Projection Tool
Our most powerful tool for wealth creation. TAG’s Wealth Projection Tool will show you how long your money will last, is easy to understand, provides clarity and helps create targets and goals. Contact us to arrange a time.
Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2021. Please do not reproduce without the expressed written consent of the author.