Tax implications of working From Home

Many workers will find themselves isolated from work but potentially working from home. What does this mean for tax purposes ?

Firstly, the question needs to be asked - Are you working from home ? This means performing work. Not just reading a few emails on your phone - That involves no additional deductions or costs. It may be wise to maintain some diary record of the dates and hours. Just being home on a work day wont be sufficient. Thats like being on sick leave and claiming car use and home office use. eg Fred plans to work from home aftre 15th March for three weeks returning on .6th April. He falls ill on 30th March and is unable to work. He may only base his deductions on 2 weeks, not three.

Can I claim a % of my home costs ? NO. Occupancy expenses like rates, interest etc or even rent remain non-deductible. To claim these costs the home MUST be a place of business not somewhere where work is performed. Your home wont be a place of business if you are an employee. No matter what the setup is. And in addition this rule only applies to a sole trader or partnership. A company its a tenant or ocupant and certainly cannot claim such deductions at any time.

Can I claim travel from home to my office since this is not my workplace ? No. Home is a place where you are performing some work. It is not a place of busienss. Travel to and from work remains non-deductible. But travel from home to a client to drop off sales or to collect a order etc would be deductible.

What can I claim ? A % of additional costs may be claimed for a home study. This needs to consider the amount of use. Its often easy to use the hourly rate basis for electricity use and the total number of working hours is best recorded and then used.. This would only apply to the lockdown period etc. Not the whole year. The diary would establish the pattern of hour and the hours involved. In addition, a share of internet or mobile use / data may be relevant and the diary may assist to support the proportion of private v work use. Again only for the period involved. Not the whole year. If you work from home alreay usinga defined pattern of use then you may have two periods. The lockdown period and the other period and need to maintain records for each. If you need to register for skype and incur fees and this is soley for work then the cost may be deductible in full provided no employer reimbursement occurs.

You can expect that the ATO will likely give some tolerance to minor deduction claims for this unique period. However the ATO will also be vigilant for irrational and excessive deduction claims.

As a guide if Fred was confined to home for 4 weeks and worked full time he may have deductions of $79 for home office costs + a share of internet (50% ? x $70 = $35) and lets assume 50% of the mobile use for the month ($45). So we are talking $160 or so maybe. So should I claim $159 ? No. Each taxpayer and their family needs to all consider these uses.

 

Can I claim the cost of face masks, sanitiser etc on my tax ?

No. These are used to provide personal protection and avoid a illness. They are not incurred in producing assessable income. These are also medical expenses and fall under the former tax laws which deny all medical deductions (since they once could access a tax offset). This apsect of law has not been repealed and it stops all medical related deductions.

 

What if they see provided by Snow employer sad a legit way of risk management for their workers' WH&S?

 

Its private. As deductible as haemmeroid ointment helps you work and is not incurred in production of income. It may be deductible to a employer.

 

Is that to say employees are a pain in the arts?

 

Tip - taking employer loo paper home is an exempt fringe benefit. Although the supply / demand curve may be pushing this towards the $300 limit

 

What if that person is a health care worker?

 

I'm thinking it's cheaper to WFH anyway. No takeaways, no train fares.....

The internet is a sunk cost anyway.

 

Thdd employer likely provides all PPE. At present NSW Health provide laundered surgical PPE and a employee can't claim laundry on that for example. If they had out of pocket gap costs sure that may fall under work related

 

coronavirus-what-you-can-claim-on-tax-while-working-from-home

 

Read a major media publication citing a seemingly qualified tax adviser who suggested you could claim a % of rent but not a % of home occupancy costs. Contrary to the well known and widely published views on occupancy costs

 

Thanks for this thread Paul. I'm still not understanding completely with claiming electricity costs if you have a dedicated work office, say i keep a diary of hours I am working in the office, do I simply apportion my total electricity bill to these hours, or do I need to first workout the floor area of the office in relation to the total floor area of the house, and then split my elec bill to those same portions, and then claim only the hours of work for that portion? Are you able to provide or link to a worked example? Really confused.

 

I'm not clear on why I would need to keep 2 sets of records? I generally wfh 2 - 3 days per week and keep a record of every date I work from home. Now I wfh 5 days per week can I not just append to that record?

 

The easier basis is the 52c hourly rate. Floor area and a bill aren't truly relevant unless you are statistician

 

What about a prepaid phone service costing $30 a month. How do you allocate business/personal cost when it is used for both phone calls and internet?

 

In the manner already available. The ATO websites consider different types if issues and how the service sis billed. Is it a buundled or non bundled plan (ie with foxtel , nbn etc). A diary record of considering the use over the period may assist.

If it was prepaid service ONLY for the work from home it may be easily to consider as 100% deductible.

 

Would 2 people both working from the same home be able to both claim this I wonder?

And is this on top of the 52c that can currently be claimed? I understood from the article that it was.

 

Yes - based on what the ABC has said (which must be true???)

 

The irony is that for a lot of people working from home will save them money: no fares/fuel/parking, no takeaway coffees and lunches, after work drinks etc.