Written by Ben Crow, COO at WLTH Finance Tracker
With the end of the financial year only a few days away, it is almost time to start submitting your tax for 2019/2020 and it is now more important than ever to understand exactly what you are able to claim, especially considering 46% of the Australian workforce has been working from home since the start of the global Coronavirus pandemic.
Although there are a number of benefits working from home and has provided a new perspective on work/life balance for a number of Australians, one of the side effects is the costs.
Due to the implementation of a nationwide lockdown, many Australians were forced to work from home and possibly outlay funds to set up a home office to maintain the same level of efficiency they operated in the office.
These expenses can add up very quickly when you look at a desk, monitor, new chair and new technology subscriptions but the silver lining is that you will be able to claim many of these expenses incurred working from home as tax deductions.
Due to the number of Australians working from home since the start of Covid-19, the ATO has introduced a number of new rules to make claiming tax deductions easier.
Deductions can be from a number of different expenses but generally speaking need to be directly related to earning an income. According to the Australian Tax Office, items that are generally tax deductible include:
There are now three ways to claim work related expenses including the new option, the shortcut method.
The Shortcut Method - This will allow people to claim a rate of 80c/ hr for all their running expenses, rather than needing to calculate costs for specific running expenses.
The Fixed-rate Method - This option was generally the go-to option before Coronavirus and may generate a bigger deduction. This will allow you to claim 52 cents for each hour you work from home for the work-related expenses you incur.
The Actual Cost Method - This can result in a much bigger return but requires a lot more record keeping. With the actual cost method you can claim the additional running costs that are directly incurred from working from home. These include:
With everything that has happened this year, it is important to work out which of the options work best for you and start looking back through your expenses to make sure you don’t miss out on the opportunity to claim back some of the costs incurred during this already difficult period.
The WLTH Finance Tracker has a number of features that will help you simplify the end of financial year and get the most out of your tax return each year.
Sign up to WLTH Finance Tracker today and remove all the stress associated with tax time today! Take control of your finances and simplify how you do your tax!