The Australian Taxation Office (ATO) released guidance for employees and business owners about the tax treatment of working-from-home expenses for those who work from home because of the coronavirus (COVID-19) pandemic.
The ATO guidance—PCG 2020/3 Claiming deductions for additional running expenses incurred whilst working from home due to COVID 19—is relevant for employees and business owners in preparing their tax returns for the financial year ended 30 June 2020 and beyond, and generally provides a “short-cut rate” to calculate additional running expenses for the period of working from home. The short-cut rate is an alternative to the current fixed rate and actual methods in calculating additional running expenses working from home.
The short-cut rate allows the taxpayer to claim a tax deduction at 80 cents* per hour every hour that is worked at home. The hourly rate covers all additional running expenses such as:
Taxpayers that use the short-cut rate to claim a deduction for their additional running expenses cannot claim a further deduction for any of the expenses (listed above).
The ATO’s guidance applies to employees and business owners during the period from 1 March 2020 who are:
Employees and business owners will need to record the number of hours they worked from home to evidence their claim under the short-cut (80 cents) per hour method. There will be a new disclosure item “COVID-hourly rate” for the deduction for home office expenses in the 2019-20 and 2020-21 tax returns.
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