2021 Tax Return – Home Expense Claims

As we approach the end of the 2020/21 financial year, the Australian Tax Office has indicated that several types of costs associated with working-from-home will not be eligible as a tax deduction.

With so many people working from home through 2020 and beyond, the ATO have issued a reminder that personal and occupancy expenses cannot be claimed. Personal expenses like tea, coffee and toilet paper that are typically supplied by employers, aren’t directly related to earning income and therefore cannot be claimed by taxpayers who were forced to work from home. Other ineligible expenses include those related to a child’s education. These include online learning courses and laptops.

The ATO also warned that working from home doesn’t make it a place of business for tax purposes. Employees generally can’t claim rent, mortgage interest, property insurance or rates. The Tax Office also warns that claiming occupancy expenses could potentially expose the home to capital gains tax on sale. 

Home Office Expenses

Last year the ATO announced a simplified method of calculating home office expenses and this ‘shortcut’ method has been extended to June 30, 2021. Taxpayers can claim a rate of 80 cents per hour to cover all their running expenses rather than calculating specific costs for running expenses. Taxpayers simply need to record the hours they worked at home on timesheets or have diary notes. The rate of 80 cents per hour covers costs including:

• Electricity for lighting, cooling, heating and running electronic items
• Phone and internet costs
• The decline in value of a computer, laptop, home office furniture and furnishings.

The shortcut is all-inclusive and can’t be supplemented by additional, individual expense claims on items like phone and internet costs. Taxpayers don’t need to have a dedicated work-from-home area to claim under this method and multiple people in a household can claim using the shortcut method.

The shortcut method is optional, and individuals can elect to claim based on the actual expenses incurred but they would need to comply with the more complex, record-keeping requirements Taxpayers should choose the appropriate method for their circumstances. (Refer also to our previous blog on this subject)

As always, don't hesitate to contact us for help regarding completing your tax return or queries on claiming all your available tax deductions.

This article forms part of our Business Accelerator Magazine. Download the latest edition HERE or browse other articles from this edition below:

• 2021-22 Federal Budget Summary
  • Budget Summary Business Taxation Changes
  • Budget Summary Personal Taxation Changes
  • Budget Summary Superannuation Changes
• It's Time to Work ON Your Business not IN your business
• New Company Director Identification Number
• Return to Top

In case you missed it - also make sure you check our Tax Planning Strategies Guide for 2021

Disclaimer: This newsletter contains general information only. No responsibility can be accepted for errors, omissions or possible misleading statements. No responsibility can be accepted for any action taken as a result of any information contained in these articles. It is not designed to be a substitute for professional advice and does not take into account your personal circumstances.