The 80 cents per hour method to claim deductions for home office running expenses has now extended and can be used for the 2020/21 income year. Home office running expenses incurred as a result of working from home can generally be claimed where employees and business owners use their home to carry out genuine income-earning activities.
The hourly rate covers all additional running expenses, namely:
- Electricity expenses (e.g., in relation to heating, cooling, lighting and electrical items, such as a computer and a printer being used for work).
- Gas expenses (e.g., in relation to heating).
- Cleaning costs for a dedicated work area at home (e.g., for a dedicated home office).
- Phone (including mobile phone) and internet expenses.
- Computer consumables (e.g., printer paper and printer cartridges).
- Depreciation of office furniture and furnishings (e.g., an office desk and a chair).
- Depreciation of home office equipment (e.g., computers and printers).
The 80 cents per hour method is an optional and alternative method to claiming home office running expenses and that individuals still have the option to use the following existing claim methods, even during the period 1 July 2020 to 30 June 2021:
- the '52 cents per hour method' (which only covers heating, cooling, lighting, cleaning an depreciation of office furniture); and/or
- the 'actual method' – which involves analysing separate running costs associated with working from home and claiming the work-related portion of such costs.
The ATO's 80 cents per hour method is generally a more simplified method for claiming home office running expenses compared to above existing claim methods. This is particularly because it is simply based on a fixed hourly rate of 80 cents for each hour worked at home and will only require minimal records to be kept (i.e., a record of the number of hours worked from home during this period).
A deduction can only be claimed by a taxpayer in these circumstances for expenses associated with their home, where the relevant expense:
- has been incurred by the taxpayer (and not paid for by a third party – e.g., an employer);
- has a sufficient connection with the taxpayer's income-earning activities; and
- can be substantiated or verified (e.g., by providing written evidence of the expense and a record of the hours worked at home to verify the deduction portion of the expense).
If you would like any further information or assistance in regards to Home Office Expenses, please feel free to contact us on 1300 885 761.