Now that a lot of us are working from home to curb the spread of coronavirus, the bills our workplaces would usually cover are now being deferred to us. That means internet, phone charges, electricity and anything else. This is a reminder to write it all down because you should be able to get a lot of it back during tax time.
Working from home is likely going to add unforeseen expenses to the bills — electricity and potentially, internet — as well as other costs you might not have realised. Thankfully, you can claim some of these expenses back but it'll depend on your situation.
See the ATO actually differentiates what you'll get based on whether you usually work from home and have a dedicated workspace, don't usually work from home but have a dedicated space or if you primarily work in an office but are working from home for a period of time and using your lounge room or bedroom to set up.
The latter two will likely apply to most of us being told to stay away from the office for the foreseeable future. Here's what the ATO says you can claim:
For those of us working from the couch or kitchen table, this means you can't claim running expenses, such as heating, cooling and lighting. It's possible the ATO will make some adjustments to the rules in light of the coronavirus outbreak so watch this space.
How to calculate working from home expenses
The ATO recommends you keep at least four weeks of records for any cost you're intending to claim. For example, most of us are probably eyeing our internet bills and it's not too difficult to calculate it.
"You need to determine your percentage of work use over a four-week representative period that you can then apply to the full year," the ATO says.
A simple equation could be: you work eight hours a day, five days a week. That's 40 hours dedicated to work. Before and after work, you use the internet for personal use for around five hours a day. Multiply that by the seven days of the week and you've 35 hours of non-work use weekly. That means work is taking up around 53 per cent (40/75 hours) of your internet usage and on a $80 a month plan, that would be $42.40 per month. Multiply that by 12 months, or the number you've been working from home for, and you'll get a number you can legitimately claim.
The same can be done for phone charges, electricity (though this depends on your setup situation) as well as the depreciation of items you're using while working from home. For specifics on how to calculate those totals, visit the ATO's website or speak to a tax professional.
The records, per the ATO, could be:
- a diary you have created to work out how much you used your equipment, home office and phone for business purposes over a representative four-week period
- receipts or other written evidence, including for depreciating assets you have purchased
- diary entries to record your small expenses ($10 or less) totalling no more than $200, or expenses you can't get any kind of evidence for
- itemised phone accounts from where you can identify work-related calls, or other records, such as diary entries if you don't get an itemised bill.
Either way, now's not the time to be apathetic about jotting down your expenses. It could lead to a decent tax payout and that's something a lot of us could use right now.
Another tax year has come and gone, and most of us have already filed out returns. (You slow coaches out there have until 31 October.) Ideally, all that admin effort should have been rewarded with a nice little sum. But only if you remembered to claim the expenses you're entitled to.