This article was originally published on 19 April 2021

Working from home in some capacity has become the new normal for many of us, which means the expenses you can claim on your tax return are now very different to when you worked full time in your normal external office space prior to the pandemic. It’s vital to get these claims right to maximise your possible refund from the Australian Taxation Office (ATO). Follow these expert tax return tips to make the most of your expenses this year.

Make Preparation a Priority

Maximising the amount you could claim back from the ATO comes down to preparation and good record keeping. “If you don’t have the paperwork, you can’t claim a deduction,” says Mark Chapman, Director of Tax Communications at H&R Block. “Gather together all the information you’ll need to help you prepare your tax return, including invoices and receipts for work-related expenses.” Of course, not everyone does this and often this results in a lower tax refund. 

SEE ALSO: 11 Tax Deductions You Could Be Claiming

Figure out Which Method Is Best for You

Use these tax return tips to decide which method for claiming for working from home expenses is best for you.

When claiming working-from-home expenses, it’s all about working out which method applies to your circumstances, then determining which gives you the best outcome. To use any method, you must meet the working criteria and record keeping requirements.

“First things first, make sure you are eligible to claim working from home expenses,” says Assistant Commissioner Tim Loh. “To claim your working from home expenses, you must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls. Also, you must incur additional expenses as a result of working from home.”

The revised fixed rate of 67 cents per work hour covers energy expenses (electricity and gas), phone usage, internet, stationery, and computer consumables. No additional deduction for any expenses covered by the rate can be claimed if you use this method. You can separately claim the decline in value of assets used while working from home, such as computers and office furniture, and other expenses not covered by the rate.

Your alternative – the actual cost method – “generally produces a bigger deduction than the cents per hour method, but many people find the record-keeping requirement associated with that method too tough,” says Chapman. 

SEE ALSO: Useful Online Tools From the ATO

Record Keeping

Whichever method you choose, there is some record keeping required.  The type of records you need to keep will depend on which method you use to calculate your expenses.

To claim a deduction using the revised fixed rate method, you will need records of:

  • the actual hours you worked from home, kept at the time they occur
  • evidence for the expenses covered by the rate that you incurred, e.g. if you incurred phone and electricity expenses you will need to keep one bill for each
  • items and expenses you claim as a separate deduction (not covered by the revised fixed rate). 

For the actual cost method

  • you will need to keep detailed records of all expenses being claimed. 

Items Costing Over $300

No matter which method is used, if you purchase assets and equipment for work and it costs more than $300, you can’t claim the full amount immediately. For each of these items, the deduction must be claimed over a number of years (known as decline in value or depreciation). You can claim immediate deductions for equipment valued up to $300.   

What You Can’t Claim

Be aware there are some expenses you can’t claim under either of the methods. These include the cost of items used for children and their education, expenses or items your employer pays for or reimburses you for), and things like tea or coffee for your working-from-home kitchen. An employee working from home generally can’t claim occupancy expenses such as mortgage interest and rent either.

SEE ALSO: How Your Small Business Can Reap the Benefits of Outsourcing

You’ll Need to Apportion Expenses Correctly

An important tax return tip is to only claim for the work-related percentage of expenses.

Apportionment is very important because you can only claim the work-related portion of an expense.

If you use an item, such as a laptop or printer, for both work and personal use, you need to apportion the cost between the two, no matter whether you’re claiming an immediate deduction or depreciating the asset. For example, if you buy a printer for $295 that you use 80% of the time for work and 20% for private use, you can claim an immediate deduction for $236. 

Generate Additional Deductions

If you prepare ahead of the end of the financial year, you can generate some additional deductions, says Chapman, that will give your tax return a welcome boost. These tax return tips include:

  • paying any professional or union fees due June 30 to claim the deduction for the whole amount this year.
  • claiming charitable donations over $2, as long as you have a receipt and the charity is registered as a deductible gift recipient.
  • if you have some spare cash, making a personal contribution into your super fund, provided this doesn’t mean you’ll exceed $27,500 for the year (including employer contributions). “This can be a great way to boost your retirement savings and claim a tax deduction,” says Chapman. “The payment must be made by June 30 and you need to submit a Notice of Intent form with your super fund. Then you need to receive acknowledgement from your fund before you claim the deduction in your return.” You can find a standard form on the ATO website

What to Try

This information is of a general nature only and should not be regarded as tax, financial, or legal advice. It does not take into account your individual circumstances or objectives. You should not act on the basis of this information without first obtaining advice from a suitably qualified professional advisor.