Home Office Running Expenses
If you are working from home, please make sure you keep records and receipts for all home office expenses, along with a record of the hours worked from home. Keeping good records now will help to get your deductions right at tax time.
Note that the hourly rate using the short cut method has been lifted to 80 cents an hour for the period starting 1 March 2020 until at least 30 June 2020 to facilitate an easier claim process during COVID-19. This method may be extended by the ATO, depending on when work patterns start to return to normal.
Prerequisites for deductions include the conditions that:
- the taxpayer has actually incurred the expenses and has not been reimbursed and
- there must be a real connection between the use of the home office or device and the taxpayer’s income-producing work.
If the taxpayer uses their home office or device for work purposes and private purposes, only the expense related to the work usage can be claimed as a deduction.
In effect, a taxpayer can claim a deduction for the additional expenses they incur, because they can establish that they incur these additional expenses as a result of their income-producing activities.
Heating, cooling and lighting expenses are only available where the taxpayer exclusively uses these services while they work from home. This means, for example, that a taxpayer working on their laptop whilst sitting on their couch next to their partner who is watching TV will have no additional expenditure on heating, cooling or lighting, but they may have some computer, phone or internet expenses which are work-related.
Special Rules for Home Office Running Expenses
Taxpayers can calculate their home office running expenses by:
- keeping records and written evidence to determine their work-related proportion of actual expenses incurred or
- use a rate of 52 cents per hour effective from 1 July 2018.
Note: You can claim a deduction of 80 cents for each hour you work from home due to COVID-19. The ATO understands that tracking these expenses can be challenging at this time. They will accept a temporary simplified method (or shortcut method) of calculating additional running expenses for the period starting 1 March 2020 until at least 30 June 2020. This method may be extended by the ATO, depending on when work patterns start to return to normal.
Taxpayers who use the rate per hour method to claim a deduction for home office running expenses only need to keep a record to show how many hours they work from home. They can do this over the course of the year, or if their work from home hours are regular and constant, by keeping a record for a representative four-week period.
This method incorporates all of the items that a taxpayer can claim as a home office running expense including lighting, heating, cooling, cleaning costs, and decline in value of home office items such as furniture and furnishings in the area used for work.
ATO LODGEMENT DATES
These dates are from the ATO website and do not take into account possible extensions.
The business remains responsible for ensuring that the necessary information is lodged on time.
BAS/IAS Monthly Lodgement – April Activity Statement: 21st May 2020 final date for lodgement and payment.
BAS/IAS Monthly Lodgement – May Activity Statement: 21st June 2020 final date for lodgement and payment.
3rd Quarter of FY 2020: BAS Lodgement – March Quarter 2020 (including PAYGI) 28th April, 2020 final date for lodgement & payment
4th Quarter of FY 2020: BAS Lodgement – June Quarter 2020 (including PAYGI) 28th July, 2020 final date for lodgement & payment
When a due date falls on a Saturday, Sunday or Public Holiday, you can lodge or pay on the next business day. A public holiday is a day that is a public holiday for the whole of any state or territory in Australia
Due date for super guarantee contributions, for:
3rd Quarter of FY 2020, January to March 2020 – contributions must be in the fund by 28th April 2020.
4th Quarter of FY 2020, April to June 2020 – contributions must be in the fund by 28th July 2020.
Late payments of superannuation are not tax deductible.
Note that the deduction is allowed in the year that the payment is made. Therefore, for the fourth quarter, if the business wants to claim the tax deduction in the same financial year as the SGC is incurred, the payment must be received into the super fund by that 30 June.
Refer to the ATO for details regarding any SGC charges applicable if not paid by due date.
SG Amnesty is currently available for late/ overdue super up to March 2018. Please note this Amnesty finishes on 7th September 2020. If your business has late/overdue superannuation guarantee payments and you are unsure the correct process of how to proceed in regards to this, please contact the ATO.
Source: The Institute of Certified Bookkeepers Newsletter, Vol 11 Issue 11, May 2020