Working from Home? 5 Home Office Tax Deductions You Can Claim This Tax Time!


 Mature aged office worker on the phone discussing her home office tax deductions

For many Australians, the silver lining to the pandemic is working from home. Millions of workers swapped their daily commute to the office to work from their kitchen table or study. Many didn’t have the ergonomic equipment they enjoyed in the office, so they went out and bought it. 

The equipment made their home working environment safer and more comfortable. And as a result, this year’s tax deductions could be much higher than usual. But it’s not just the items you have receipts for that you can claim. There’s a few other deductions that could earn you a tax refund windfall.

#1 Home Office Supplies

If you require supplies such as pens, paper, cables, a keyboard, monitor stand or calculator to allow you to work from home, you can claim them as a tax deduction. When you do your tax return, you can claim the cost of any equipment or supplies under the value of $300. If the cost of an item is more than $300, you need to depreciate it over the life of the item rather than claim the full cost during the first year.   

However, if the equipment is partly for personal use, you can’t claim the full amount. The ATO gives the example of a $150 calculator that is used 40% of the time for private purposes and 60% of the time for managing a share portfolio. The deduction would need to be reduced by 40% to reflect the private use.

#2 Electricity & Home Office Expenses

The ATO recognises there’s a cost in you working from home that used to be covered by your employer. You’re more than likely powering your computer, using additional lighting, and running the heater on chilly days. Equipment and appliances require electricity, (or gas) to run and that’s an expense. 

Soon after workers abandoned their offices to work from home, the ATO announced a shortcut method to simplify calculating home office expenses. Between 1 March and 30 June, employees working from home due to COVID-19 can claim 80 cents per hour for all their running expenses. The ATO removed the need for a dedicated work from home area.    

If you choose you can use the existing occupancy cost method which allows you to claim for a percentage of the electricity, water, heating, rent, mortgage interest etc based on the size of your home office versus the rest of your house. But beware there can be capital gains tax implications when you sell your home if you start claiming part of the interest on your home mortgage. You should speak to a tax professional for advice.

#3 Computers & Internet

If you had to buy a computer to work from home, you can claim the expense; but if you’re using a computer supplied by your employer, there’s nothing to claim for the asset. 

However, part of your home internet charge can be claimed as a tax expense. If you use your home internet connection to access work emails and to work, you can claim the percentage of time you use the internet for work purposes. 

If you and other members of your household use the internet connection to access your personal email, shop online, watch Netflix or game then a percentage of your monthly internet charges can’t be claimed. If you’re using the shortcut method of 80 cents per hour worked from home, your internet expenses are included in this rate.

#4 Travel Expenses

When you are commuting to the office each day, you can’t claim the cost of public transport or car expenses because this travel is a private expense. 

If your employer sent you home to work due to COVID-19 the majority of the time but you needed to go to the occasional meeting, you may be eligible to claim the car expense related to these trips.

Splitting Work Time Between Home and Office 

To reduce the number of people in the office, some organisations have split their workforce into teams. One team works from home one week while the other team is in the office then they swap. You aren’t eligible to claim the cost of commuting for the weeks you travel to the office.

#5 Depreciation of Office Equipment & Furniture

Hold on to your receipt if you bought office furniture such as an ergonomic chair, a height adjustable desk, or computer to allow you to work remotely. If the cost of an item is more than $300, you can depreciate the cost over its life and claim a deduction each year for the work-related part of the equipment or furniture.

FAQs to Home Office Tax Refunds 

Thousands of Australians have worked from home for the first time so it’s understandable they’ll have questions come tax time. 

What Can’t I Claim? 

Remember you can’t claim anything that’s personal use, it’s only expenses incurred in earning your income. You can’t claim the cost of items your employer usually supplies when you’re in the office such as tea and coffee. While you’re working from home, you’ll need to supply your own. Children’s education expenses can’t be claimed while students were learning remotely.

How Much Can I Claim? 

That depends on the expenses you’ve incurred. If the expenses are genuinely related to earning an income then you can include them in your tax refund. Keep receipts or records of your claims so you can substantiate them if the ATO asks for more information.

Do I Need Taxation Advice?

Don’t make the mistake of spending money just because of the tax windfall you expect to get at tax time. Everyone’s situation is different so it’s important to seek expert advice from a qualified accountant if you are unsure of anything. 

This article does not take into account your personal circumstances.

For personalised information on which office equipment is the most suitable for you, visit the Ergolink showroom, call us on (08) 9240 7066 or contact us online.