Working from home deductions due to COVID-19 – maximising your tax refund

November 4, 2020 5:22 am

Due to COVID-19, a vast majority of people working in Australia have been asked to work from home.

So you could work home, you may have had to buy some things like a laptop or headset. You may also be spending more money on things like electricity or internet costs.

If you spent your own money, there is a new simple way to claim a deduction for working from home. A deduction means you pay less tax.

This new way is only if you worked from home from:

  • 1 March 2020 to 30 June 2020 in the 2019–20 financial year
  • 1 July to 31 December 2020 in the 2020–21 financial year.

You can claim $0.80 for every hour you worked from home.

This is to cover all your extra costs of working from home.

You cannot claim for anything else. For example:

  • things you bought (like a desk, laptop, printer, stationery, headsets, etc)
  • your higher bills (like electricity or phone).

You need to keep a record of how many hours you work from home.

This could be a diary or a timesheet.

How to work out your deduction

When you do your tax for 2019–20 you need to work out how many hours you worked from home between 1 March 2020 and 30 June 2020.

For example, if you worked from home for 8 weeks and you worked 40 hours each week that would be 320 hours.

When you have worked out the total hours you multiply it by $0.80.

For example, if you multiply 320 hours by $0.80 per hour you get $256.

This means you could claim a deduction of $256 when you lodge your tax return.

These numbers are just examples.

You need to work out the numbers for you.

Requirements in claiming your deduction

You must:

  • keep a record of how many hours you worked from home
  • work out your deduction amount
  • write the deduction amount in your tax return
  • write 'COVID-19 hourly tax rate' in your tax return.

There are 2 other ways you can work out deductions for working from home:

  • Fixed rate method
  • Actual cost method

If you are not sure which way to work out deductions is best for you, let our registered tax professionals work out which method to use to maximise your tax refund.

Get in touch with pinkcow—we’d love to help.