Working from home expenses reduce your tax debt.
Working From Home Expenses
Claiming working from home expenses saves you tax and hence money. For your 2021 tax return you have three options to claim working from home expenses.
1 – Simplified Method
Under this method you claim 80 cents per hour for every hour you worked from home.
The good thing about this method is that you don’t need
a) a dedicated workspace and
b) any receipts. Just working from home is enough.
The bad thing is that you can’t claim anything else. The 80 cents covers everything.
This method finished on 30 June 2021. So you can still use it for your 2021 tax return, but after that no more.
2 – Fixed Rate Method
Under the fixed rate method you claim 52 cents per hour for your workspace. And then you claim a proportionate amount for your internet, phone, stationary, computer in addition to this.
The good thing about this method is that it might give you a higher deduction than the simplified method, but whether it does or not of course depends on the amount of your expenses.
The bad thing about this method is that you must have
a) a dedicated workspace and
b) receipts for everything you charge in addition to the 52 cents per hour.
3 – Actual Cost Method
The good thing about the actual cost method is that it might give you the highest deduction of all, depending on your actual cost and the proportionate size of your workspace.
The bad thing is that you need
a) a dedicated workspace and
b) receipts for everything.
For all three methods you need diary evidence to prove the hours you worked from home. So a timesheet, roster, diary or just a list where you write down the hours you worked from home, but this is easily done.
Rent and Mortgage Interest
One tricky question is always rent or mortgage interest, because they are big ticket items about a lot of money.
If you rent your place, can you claim a part of your rent or – if you own your home – part of your mortgage interest, council fees and house insurance?
The answer for employees is No. If you are working from home as an employee and so you have work-related expenses, you can’t claim rent but just the running costs for your work space, so electricity, gas, furniture and stationary etc.
But the answer is possibly Yes, if you run a business at home or from home and your home is your only place of business. If you own your home, there is the risk that you might lose your CGT main residence exemption, but the risk might be lower than you fear.
Just give me a call on 0407 909 779 if you want to discuss how to maximise your tax deductions.
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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.
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