Due to COVID-19 restrictions, the majority of business owners and employees are working from home, and most of them are finding it hard to calculate the additional running expenses incurred while working from home to claim deductions.

Some of the additional expenses eligible for a claim include lighting, heating, cooling, electricity costs, furniture, furnishing costs, phone and internet expenses, computer consumables, stationery and other electronic device expenses.

The Practical Compliance Guideline (PCG) provides a simple calculation for calculating the claim by specifying a fixed rate per hour for all the expenses listed above. This shortcut method is expected to be helpful for taxpayers who are currently working from home anywhere in Australia.

No type of occupancy expenses such as rent, mortgage interest, property insurance and land taxes are covered under this guideline as they are not eligible for deduction.

Who Are Eligible Under This Guideline?

This guideline applies to employees and business owners who are:

• Currently working from home to fulfil their employment duties or to run their business
• Incurring additional running expenses with WFH that are deductible

Date of Effect: This guideline is effective from 1 March 2020 and will cease to apply on 30 June 2022.

Shortcut Rate Method For WFH Deductions In Detail

The previous date for applying under this guideline was 30 June 2021 and has now been updated by the ATO to 30 June 2022. This extension in the time limit and shortcut method is specifically altered for eligible taxpayers who were having a hard time doing calculations.

With the latest extension of a year, employers and employees working from the comfort of their homes can now claim additional running expenses incurred between 1 March 2020 and 30 June 2022 at the rate of $0.80 per work hour. Make sure you maintain a detailed record of the number of hours worked from home and can provide the report whenever asked by the ATO.

Taxpayers eligible to use the shortcut rate incur additional running expenses that are deductible under s 8-1 or Div 40 of the ITAA 1997.

If you are in need of professional assistance or need to talk to registered tax accountants to help you in claiming your tax deductions, KPG Taxation has the experience and knowledge to assist you.