What is it?

With the onset of the coronavirus pandemic in early 2020, many people saw a disruption to their normal working life. The pandemic forced many into working from home. Some governments decided to implement tax deductions to certain expenses. The Morrison government was no different and allowed an array of new tax deductions for remote workers. Here, we will explore on what expenses you may claim a tax deduction for in Australia.

2 years in, plenty of those eligible still aren’t fully claiming the deductions they are eligible for. It’s really worth getting across what applies to you since you can literally save thousands of dollars annually.

How to Claim Working from Home Tax Deductions

To be eligible to claim tax deductions you need to have:

• Spent your own money
• The expense is directly related to your job/income
• Have records to prove it

You cannot claim eligibility for:

• Items provided by your employer
• Expenses that you have been compensated for

You may find out more on how to calculate these deductions here. But in most cases, your accountant will do that part for you.

Types of Expenses That can be Claimed for Working from Home Tax Deductions:

Occupancy expenses

Occupancy expenses involve expenses an individual needs to pay to own or use in their home such as:

• Rent
• Mortgage interest
• Water rates
• Land tax
• House insurance premiums

Often, an employee working from home may be unable to claim occupancy expense unless they can prove that they work from home due to the lack of an alternate workspace provided by their employer. Additionally, they must prove the area in which they work from home remains solely for work purposes such as a home office or study.

Running expenses

If you fall into the category of sole trader or partnership you may claim for running expenses. Running expenses involve the costs generated by using your home’s facilities for the purpose of your business. These include:

• Cost of using a room (heating, cooling, and lighting)
• Cleaning costs
• Landline and phone costs
• Depreciation of furniture and equipment used for business purposes
• Home office equipment such as computers, phones, docking stations etc.
• Computer consumables such as paper, ink and stationary
• Repair costs of hardware and equipment

Expenses That Cannot be Claimed for Working From Home Tax Deductions

However, certain expenses may be prevented from being claimed. These include:

• General household amenities such as tea, milk, or coffee. You may not claim these expenses even if previously, they were provided by your employer at work.
• Expenses that relate to other family members such as children. This includes anything related to the expenses of your children’s education (i.e. equipment bought for them such as computers).

If you are from outside Australia – this post on the same subject may be more relevant to you.