Social distancing rules due to COVID-19 have forced many Aussies to work from home — how will this affect their tax claims?

With more Australians than ever working from home since COVID-19, there's a few more things to know before completing your tax return

Mark Chapman, Director of Tax Communications, H&R BLOCK, said Australians can claim work-related costs such as the following:

  • Heating, cooling and lighting bills
  • Costs of cleaning your home working area (including cleaning products or payment for a domestic cleaner if required)
  • Depreciation of home office furniture and fittings
  • Depreciation of office equipment and computers
  • Costs of repairing home office equipment, furniture and furnishings
  • Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)
  • Computer consumables (like printer ink) and stationery
  • Phone (mobile and/or landline) and internet expenses

"Ideally, you should have a specific room set aside as a home office. If you are using a room with a dual purpose, or a room shared with others, you can only claim the expenses for the hours you had exclusive use of the area," Mr Chapman said.

Also read: What tax deductions are available for property owners?

To continue to claim deductions for working from home expenses after 30 June 2022, you will need to use either the fixed rate method (52 cents per hour) or the actual cost method.

"This covers the extra costs of heating, cooling, lighting and the decline in value of furniture. All you need to do to claim this is to keep a diary — note the time you start work each day, the time you finish work each day and any breaks. You can then claim 52 cents per hour for each working hour," Chapman said.

When using this method, Australians can make separate claims for work-related usage of home internet, mobile phone costs, stationery, and printer ink.

Another option is to claim the actual costs incurred during working hours. This can generate a bigger claim but this requires more paperwork and calculation.

"You’ll still need to keep a diary of your work-from-home hours and you’ll also need to work out the amount of your home (by floor area) that you’re using as your work space. From this, you can then work out the work-related proportion of your household expenses and apply this percentage to the actual amount you spend on electricity, gas, water, phone and internet, etc. You’ll also need to keep all the original bills to prove your claim," Chapman said.

To help you with this method, Chapman suggested seeking advice from a tax agent.

Despite the temporary arrangement for work-from-home setups, Chapman said homeowners will still not be able to claim "occupancy expenses" like mortgage interest, rates and home insurance.

"The exception to that rule is where you actually run your business from home. That could mean someone whose business is based at home or someone who carries out their business at clients premises but uses home as a base for administration or storage," he said.

However, people who run a business from their homes might lose part of the capital gains tax exemption on their property.

Related: How to apply for a home loan as a self-employed borrower