One of the possible long-term impacts of the coronavirus is a fundamental change to how businesses operate with new research suggesting that up to fifty per cent of the workforce expect to continue to work remotely after the virus is contained.
If you are working from home, you may be able to claim a deduction for some of the expenses for your ‘office’ area. There are two parts to this, those employees working from home and businesses where their principal place of business is their home – effectively running their business from home.
To claim a deduction, you must have spent the money (not been reimbursed by your employer), the expense must directly relate to your employment and you must keep a record to prove it. If you receive an allowance from your employer instead of a reimbursement you must include the allowance as income on your tax return and claim the corresponding expense as a deduction.
Working from home during COVID-19
The ATO has acknowledged that many taxpayers may be working from home at this time and that tracking home office expenses may be a challenge. As a result, they are accepting a temporary simplified method of calculating additional running expenses from 1st March 2020 until (at least) 30th June 2020. Expenses not claimable under COVID-19 provision include occupancy expenses such as mortgage interest, rent or rates nor the cost of general household items such as tea, coffee, milk which your employer would otherwise provide.
The simplified method
You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:
Working from home to fulfill your main duties, not just occasionally checking emails or taking calls
Incurring additional deductible running expenses, as a result of working from home:
Electricity used for lighting, cooling, heating and running electronic items such as your computer, gas heating expenses
Depreciation and repair of capital items such as home office furniture & fittings
Phone costs including depreciation of the handset
Consumables such as printer ink and stationery
Depreciation of computer, laptop or similar device
By using the simplified method you cannot claim further for the expenses listed above and you must keep a record (timesheet, diary notes or rosters) of the number of hours worked at home as a result of COVID-19. To claim the shortcut method on your tax return – include the note ‘COVID hourly rate’.
While simpler, the simplified method may not lead to the best tax outcome for all clients. We encourage anyone thinking of using the method to compare the likely result to the likely result and time commitment of recording actual expenses incurred.
If you have any queries, please do not hesitate to contact us on (08) 9316 7000.
If you have considered undertaking a course at a college, university or other recognised educational institution that could improve or maintain your work-specific skills or knowledge, related self-education expenses may be deductible.
For self-education expenses to be deductible, certain eligibility criteria must apply.
Direct Relation to Current Employment
To be eligible, the course you wish to undertake must directly relate or have a sufficient connection to your current work activities as an employee and:
Result in, or is likely to result in, an increase in your income in your current work activities; or
Improve or maintain the knowledge/skills required in your current work activities; or
Upgrade your qualifications for your current employment (i.e. upgrading to a Masters qualification – MBA); or
You are a trainee and you are undertaking a course that forms part of that traineeship.
As the course must relate to your ‘current’ employment, courses that are likely to result in gaining ‘new’ employment are excluded. Undertaking a course that is only generally related to your current employment will also be excluded (e.g. working as a casual retail assistant and undertaking a course in fashion photography).
Deductible Expenses for Eligible Courses
Expenses relating to eligible courses that may be deductible include, but are not limited to:
Tuition fees (paid personally)
Student services and amenities fees / Student Union Fees
Textbooks, printing, and stationery
Academic, trade or professional journals
Home office running costs
Telephone and internet
Repairs and Maintenance to Self-Education Assets
Travel Costs (between home and place of education or between workplace and place of education)
Depreciation on assets (immediate deduction < $300)
Please note that for the expenses to be personally deductible, they need to be personally paid. Expenses paid by employers will be deductible to the employer. Expenses will also have to be apportioned for any private use (i.e. if you use your computer 70% for private purposes and 30% for self-education purposes, only 30% of the expense will be deductible).
The following expenses are not deductible, regardless of whether the course you undertake is eligible:
Accommodation and meals associated to day-to-day living (unless living away from home to study – i.e. residential school)
HELP Loan repayments/ VET Student Loan repayments / SFSS Student Financial Supplement Scheme repayments
Home Office Occupancy expense (i.e. rent, mortgage, rates, etc.)
Amounts you have been reimbursed for
Expenses that come under Category A will be reduced by $250, therefore the first $250 of self-education expenses incurred for items such as textbooks and stationery will be ‘lost’ or ‘absorbed’. However, expenses that come under Category C, D or E are not reduced.
Example – Molly is an apprentice beautician studying beauty therapy at TAFE. Her textbooks, transport fares and TAFE fees total $300 (Category A). The expenses are reduced by $250 and the remaining $50 can be claimed as a self-education deduction.
If you have been considering expanding your skills and knowledge in the workplace to advance your career it would be of value to know whether expenses you have incurred relating to self-education are tax deductible. If you are unsure whether your self-education expenses are eligible or if you have any further queries, please do not hesitate to contact us on (08) 9316 7000.