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Employees working from home
As the situation around COVID-19 continues to develop, you may be working from home and incur expenses that you can claim at tax time.

To claim a deduction for working from home, all of the following must apply:

-You must have spent the money.
-The expense must be directly related to earning your income.
-You must have a record to prove it.

This means you cannot claim a deduction for items provided by your employer.

If you receive an allowance from your employer to cover your expenses when you work from home, you:

-must include this allowance as income in your tax return.
-can claim a deduction as outlined in this fact sheet.

Expenses you can claim
If you work from home, you will be able to claim a deduction for the additional running expenses you incur. These include:

-electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work -cleaning costs for a dedicated work area
-phone and internet expenses
-computer consumables (for example, printer paper and ink) and stationery
-home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the full cost of items up to $300 or decline in value for items over $300.

Expenses you can’t claim
You cannot claim occupancy expenses such as mortgage interest, rent and other general household items your employer may otherwise have provided you with at work.

Calculating running expenses
There are three ways you can choose to calculate your additional running expenses:

Shortcut 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 fulfil your employment duties. It covers all deductible running expenses, including:

-electricity for lighting, cooling or heating and running electronic items used for work
-the decline in value and repair of home office furniture and furnishings -cleaning expenses
-your phone and internet costs, including decline in value of the handset
-printer ink and other stationery, including decline in value of computer or similar device.

You must have incurred additional expenses in some of those categories. If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above. The Australian Taxation Office will accept this temporary simplified method of calculating additional running expenses for the period from 1 March 2020 until 30 June 2020 but we may extend this method when work patterns return to normal.

Fixed rate method ─ a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture. The work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery, and the work-related portion of the decline in value of a computer, laptop or similar device.

Actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

Records you must keep
If you use the shortcut method, you only need to keep a record of the hours you worked at home, for example timesheets or diary notes. Also, Include the note ‘COVID-hourly rate’ in your tax return when you lodge your 2019-20 tax return. If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses.