For the majority of us who spent the last few months of the financial year working from home, our upcoming tax return is posing some interesting questions.
For instance, can I claim my pack a day habit of Red Rock Deli Lime & Black Pepper chips (if you know, you know) that I demolished while muted on Zoom? How much is too much to spend on a ballpoint? And finally, can I get a luxe new dining table out of all this? Here’s the deal.
First things first, if you worked from home between March 1 and June 30 during the COVID pandemic, you’re definitely entitled to a deduction for the extra expenses you incurred. But before you start rattling off fair-trade beans and toilet paper rolls (#tbt to that crisis), it’s imperative you follow the three ‘golden rules’ of deductions—you must have spent the money and not been reimbursed, the item you are claiming must be used strictly for work purposes, and you must have a record or receipt as proof of purchase.
In anticipation of an influx of work-from-home claims this year, The Australian Tax Office released a temporary shortcut for claiming running expenses, essentially only requiring a timesheet or proof of working hours to claim a flat deduction of 80 cents for every hour you worked from home between March 1 and June 30. If you use this ‘shortcut’ method for your return, you don’t need a dedicated work area to make your claim. However, if you use either the fixed-rate method (52 cents per hour to cover costs including electricity, gas, and home office furniture), or take the more complex actual expenses route, you do need a designated home office area to make a claim.
What you can and can’t claim as deductions differs depending on which of the three methods you use, but there are some definitive ‘don’ts’ across the board. If you saw the lock down as your ticket to a gold-plated stationary set, bad news—that move remains between you and your bank account. While some stationary can be claimed, its price must be within reason for that item and it must meet the ‘strictly for work’ rule, so if you bought and used a planner, make sure you didn’t mark any personal events in there as well. (Insert obligatory joke about plans in 2020 here.)
Snacks, lunches, and late-night work dinners in front of the computer also miss the mark. It’s your job to feed yourself, and having to pay for your own meals would’ve occurred whether you worked from the office or at home. This also goes for items like tea, coffee, and those cheeky little Digestives you like to sneak between meals. Toilet paper is another essential you can’t claim as an unexpected expense, unless you’re trying to claim you only use it during work hours, in which case, it sounds like you have a bigger problem on your hands.
Home office furniture definitely meets the claim criteria, but things get a little murkier if you’re sending emails from the dining table. Unless you can claim that you haven’t eaten at or used your new Scandi-modern 8-seater for anything other than work, chances are it doesn’t meet the brief. Also, if you’ve been home-schooling the kids (thoughts & prayers), you won’t not be rewarded by the Tax Department for your tireless labour, nor will childcare costs be deductable.
One of the biggest grey areas here is whether you can claim expenses like your mortgage or rent. Essentially, unless your home is your formal place of business (i.e., you run a small business from your property) you won’t meet the requirements to claim ‘occupancy expenses’ because your employer normally provides you with a place to work. If you can prove that the room you’re claiming is used exclusively for work you may be eligible, but seeing as most temporary work from home zones have been set up in lounge rooms and bedrooms, this usage requirement won’t be met. Finally, if you found yourself making sporadic trips to and from the office these past few months, travel expenses cannot be claimed because your home is still a private residence, regardless of how much work you’re doing in there.