The Work-From-Home Expenses You Can Claim From Your Employer Or The ATO, According to a Financial Advisor

The Work-From-Home Expenses You Can Claim From Your Employer Or The ATO, According to a Financial Advisor
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The end of financial year is almost upon us and that means there’s no more room to neglect your personal finances. Set up a meeting with your manager to discuss the reimbursement of your at-home expenses and gather all the necessary documents to file your tax returns.

Licensed financial advisor and spokesperson at Money.com.au Helen Baker explained in a media release it’s important to distinguish between costs that employers will need to reimburse you for and others that you’ll have to claim via tax returns.

“As the pandemic and consequent shutdowns shocked the private sector, most businesses found themselves scrambling to transition employees to home-based work while maintaining productivity,” Baker said in a media release.

“As such, I believe many businesses have not yet set up a process for reimbursable at-home expenses with their staff. However, employees may have a right to have certain expenses reimbursed by their employer if those expenses were required to carry out their job, and had to be purchased by the employee to work from home.”

Baker elaborated that for employees, it’s better to get a reimbursement than a tax deduction as employers are likely to pay back the full cost for any eligible expense.

“For instance, if you are in the 32.5 per cent tax rate bracket, you will still be paying 67.5 per cent for the cost of the item,” she said.

“Some employers will be very lenient. Others might want to retain ownership of some items they reimburse you for, such as PCs or other high-cost hardware. Check with your employer before deciding whether you would like the item reimbursed.”

To simplify things, as taking care of finances can get a bit complicated, Baker’s broken down nine common at-home work expenses and how you might get money back for most of these.

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Phone calls

If your job requires a lot of phone use, it’s reasonable to request your employer to cover this expense.

“This could be by way of a flat ‘disbursement’ fee of, say, $50-100 a month, which is easy for both you and your employer. Or your employer might ask you to provide itemised costs, whereby you will need to show your employer your bills each month with work separated from personal costs,” Baker explained.

“If, instead, you are claiming calls as a tax deduction, consider if the actual cost method is most appropriate for you. You must also keep a record of itemised work call costs. For those only using their phone for work occasionally, the shortcut or fixed-rate method for claiming a tax deduction may be more appropriate for you.”

Internet and mobile data

It’s possible to get a reimbursement for these costs if you had to opt for a higher-costing plan in order to work from home effectively. A reasonable request would be to ask your employer to compensate for the difference between the two plans. In case you didn’t need to get on a better plan, you could still claim some of the internet and mobile costs through the shortcut, fixed-rate or actual cost method.

Hardware such as laptop, cables and mouse, and stationery

If working from home meant having to purchase additional equipment — not to be used for personal purposes in the long term — you could ask your employer for a reimbursement. However, this is unlikely to happen in the scenario where items are deemed non-essential and categorised under personal use such as a second PC monitor, cables for your home printer, printer ink if other family members are also using the printer, or a laptop that you’ll keep with you at home. These, however, could possibly be claimed when you’re filing for tax returns.

Software subscriptions

Software subscriptions purchased on your work computer for work purposes can be requested for reimbursement. A possible reimbursement would also qualify if you had to install the software on your home computer but only for the purpose of carrying out your work duties. However, renewing license for pre-installed software on a home computer, will only allow you to claim a portion of the expense as a tax deduction, as you are likely to continue using the software for personal use.

Furniture

Most of us didn’t have a work setup at home when the lockdown started so we went out and bought a desk and a chair among other essentials. However, these expenses fall under the tax claim category and will not be eligible for reimbursement by your employer as you’re going to carry on using the furniture for personal use.

“If you are claiming under the shortcut method, this expense falls under the 80 cents per hour calculation,” Baker said.

“However, if you are using the actual cost method and the assets cost less than $300, you can get an immediate deduction for the depreciating asset. While cleaning products are also an essential in a home office these are included in the shortcut and fixed-rate methods.”

Coffee, tea and late-night meals

Employers normally provide coffee, tea, milk in the office and some even pay for takeouts when you’re working till late. However, they’re unlikely to reimburse you for any food-related items since you’re ‘presumably at home’ and can cook food for yourself. These are also not tax deductible.

Electricity

Baker explained that heating, cooling and lighting can be claimed when you do your taxes via the shortcut or fixed-rate methods. It’s highly unlikely any employer will reimburse you for electricity expenses as it’s difficult to make out what portion of the bills relate to work use, especially if you have other people living with you.

Travel and parking costs to source home-office items

This one’s also unlikely to be covered by your employer, and travel to your office and back home is not tax deductible. But with home being the ‘new office’ there might be something there to consider. You could find out via ATO’s online forum ‘ATO Community’.

“If you had to regularly get the mail for your employer, or pick up work parcels, these costs may be tax deductible for the public transport ticket and the kilometres travelled by car, depending on the journey,” Baker explained.

At-home alcohol and snacks for your Zoom team socials

Alcohol is definitely not tax deducible and you won’t be able to request a reimbursement from your employer either. Businesses normally treat its staff to wine and snacks as a goodwill gesture and claiming reimbursement for ‘luxury’ items doesn’t fit the bill.

Disclaimer: This article contains general information only and is not intended to be used as personal advice.

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