Claiming Home Office Deductions During COVID-19

A lot more people are working from home because of the COVID-19 pandemic. If you operate your business from a home office, you can deduct the expenses of running that office. A home office is a room in your home that is used exclusively (or almost exclusively) for business activities.

Expenses you can claim a deduction for include:

  • occupancy expenses – these include rent, mortgage interest, water rates, land taxes, and house insurance premiums. Occupancy expenses are usually calculated by apportioning the expenses between the home office and the rest of the property on a floor area basis;
  • running expenses – these are the increased costs from using your home for your  business, including electricity or gas charges for heating, cooling, and lighting,  cleaning costs and the decline in value and the cost of repairs of depreciating assets such as furniture, furnishings, and equipment; and;
  • work-related phone and internet expenses, including the decline in value of the handset – an apportionment will be required if the phone or computer is not used exclusively for work.

If you are an employee working from home, you may be able to claim a portion of your running expenses and work-related phone and internet expenses.

To make it easier for people to claim deductions for working from home due to the COVID-19 pandemic, the ATO will allow a rate of 80 cents per hour from 1 March 2020 until 30  September 2020 for all additional running expenses. This also applies to anyone working from home, even if not operating a business.

This is different from the 52 cents per hour claim that covers fewer types of expenses. Talk to avance about what method is most appropriate for your circumstances.

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