The Australian Tax Office Is Cracking Down on Ineligible Work-From-Home Claims

The Australian Tax Office (ATO) wants taxpayers to be aware that there are four key ineligible work-from-home claims they will be monitoring closely as Australians look to make the most of their flexible working arrangements.

The ATO has remained taxpayers that while the temporary covid hourly rate shortcut method remains available those claiming work-from-home deductions this year, personal and occupancy expenses, among others, cannot be claimed through any method.

When you are working from home there are a number of expenses that cannot claimed. These expenses include; the cost of tea, coffee, milk and other household items which your employer might provide you with at work. These household items cannot be claimed by taxpayers as they aren’t directly related to your earning income.

Whilst working from home you are also unable to claim items such as a laptop or phone that was given to you by your employer. Employees also can’t claim occupancy expenses such as; water expenses, mortgage interest rates or rent.

The ATO has warned taxpayers that claiming occupancy expenses could expose some Australians to capital gains tax when they leave their homes.

Australians who are working from home are also unable to claim costs that relate to their children and their child’s education such as; setting them up for online learning, teaching them at home and buying equipment such as; an iPad to assist with teaching your child.

Earlier this year, to ease the burden on Australian taxpayers who are working from home the Australian government extended the 80 cents per hour shortcut deduction method. This incentive originally introduced in April 2020 will now be in place until 30th June 2021.

The method’s introduction did, however, result in the end of a measure which required taxpayers to have a dedicated work-from-home area, factoring in multi-person households, where each working taxpayer would now be able to claim.

Tax agents or self-lodgers must include the “Covid-hourly rate” in their annual tax returns if they choose to nominate to use this method. If choosing to use this shortcut method, all an individual has to do is keep a record of the hours they have worked from home as evidence when making a claim.
To be eligible to claim a deduction whilst working from home the ATO outlines that; “you must have spent the money, the expenses must be directly related to earning your income and you must have a record to prove it”.

Electricity expenses associated with heating, cooling and lighting the area of which you are working from within your home can be claimed under the scheme. Cleaning costs can also be claimed, as well as expenses for internet usage and phone calls. Newly bought home office equipment that is purchased for $300 or less can also be claimed. Office equipment consisting of new computers, phones, printers, furniture and furnishings. Computer consumables such as; ink, stationary and printer paper can also be claimed.

The covid-19 pandemic has changed the way millions of people around the world work. Working from home rather than commuting to an office space has become the new normal and is a trend that will likely remain common long into the future for years after the pandemic is finished.
There are some key benefits to working from home in terms of the flexibility it provides and the money saved that is usually spent on public transport or fuel. Despite this, there are also some negative side-effects which mean it is important for employees to take care of their mental health whilst they are stuck in their home. 

Many people working from a home which they share with other family members often suffer from “time elasticity illusion”. This phenomenon happens when other people assume the worker can spend time on household tasks without it having an impact on the amount of time the employee spends on their paid work. This involuntary overlap of household and work commitments often leads to fatigue.

It is therefore crucial for individuals who are working from home to set-up a dedicated, distraction-free work space where they can foster deeper cognitive processing and stay focussed for longer periods of time. Having a separate room to work from can help separate work hours from non-work hours. This is extremely beneficial as many people have found that there is a blurring of professional and personal space within their home. This has resulted in some employees struggling to switch off from work. This consequently in some cases has negatively impacted their quality of sleep.    

The Australian Tax Office Is Cracking Down on Ineligible Work-From-Home Claims