There are two methods of claiming your consumption costs:
Actual expenses by square metre
If you have a designated office space, you can claim a percentage of your consumption costs using the percentage of square metres compared to the entire square metres of your house. You can then apply this percentage to your actual expenses incurred for the period you worked from home.
Claiming by this method may result in a potential capital gains issue when/if you choose to sell your home. Substantiation requirements for this method are rather onerous: you must keep all your invoice/receipts, and you may face higher accounting fees for capital gains calculations.
Cents per hour
This method allows you to log the time you work from home in a diary or some form of logbook fashion. You can then add up the time that you have spent working from home and claim $0.45 cents for every hour worked. This method requires you to keep your records of hours worked.
Costs such as purchases of a new computer, home office desk or chair purchases can be claimed by percentage of use. If you purchase a computer desk and chair purely for the purpose of working from home, you may depreciate (or claim outright depending on the cost) the expense. The same would go for a computer or laptop, however you would need to adjust this laptop for personal use, only claiming the percentage of the cost that pertains to your income derivation.
Home expenses claimed that are over $50.00, such as internet and phone, are required to be substantiated. The ATO recommends diary entries and copies of the invoice that you are claiming, as well as evidence that your employer requires you to work from home. The ATO suggests a log book method of diarised entries for a minimum of four weeks.
In today’s day and age with plan-based billing, it can be hard to figure out what costs have incurred for work purposes.
How to work out your phone usage:
if your claim is less then $50, the ATO allow reasonable rates of:
0.25 land line outgoing calls
0.75 mobile outgoing calls
0.10 text messages sent
If you are claiming over $50, and you have access to an itemised bill (you may need to request it from your provider) you can apportion your costs by:
If you cannot get an itemised bill, you should diarise (for a minimum of four weeks) all phone activity, and apportion it on a reasonable basis using this ‘log book’.
Phone and internet bundles must be separated and their useage claimed accordingly.
Internet can be claimed by calculating data used for work purposes as a percentage of total data. Further, you are able to claim any additional costs you have incurred as a result of using your data - eg going over your data cap.
Finally, actual costs such as stationery bought purely for work purposes (and your diary to log the information in) can be claimed out right. Make sure your keep your receipts (take a copy of shop receipts so when they fade you still have the record).
Common home expense related myths and facts:
MYTH: I didn’t think I could claim it because my employer gives me an allowance.
Your allowance for those expenses is your employer compensating you for having to incur them. You should keep your records and claim your actual expenses against your allowance. You may find you are out of pocket from spending this money (or you could make a profit).
FACT: I can’t claim those times because my employer reimbursed me.
Reimbursement of expenses means you are not out of pocket, and ultimately your employer is paying for the expense.
FACT: If I claim a percentage of rates/interest on my home i will be required to pay capital gains tax on my home if I sell it.
Your home is exempt from capital gains tax because it is not an income producing asset. If you claim holding costs you will be required to pay capital gains on a percentage of your gain relating to those holding costs.
If you are unsure, write it down and record it. We can figure out whether it’s claimable at the end of the year.
If you don’t record it, we can’t claim it.
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