Shortcut method for home office deductions

PCG 2020/3 has been amended to extend the period that taxpayers can use the ‘shortcut’ 80 cents per hour method for calculating deductions for additional running expenses incurred while an individual is working from home due to COVID-19.

Taxpayers will now be able to use this method in relation to the period from 1 July 2021 to 30 June 2022.

The shortcut method ends on 30 June 2022. To continue to claim deductions for working from home expenses after 30 June 2022 you will need to use either the:

• fixed rate method
• actual cost method

You will need to meet the eligibility and record-keeping requirements for the method you choose to use.

Eligibility

You can use this method if you:

• worked from home and incurred some additional running expenses as a result
• have a record of the number of hours you worked from home.

How it works

The temporary shortcut method simplifies how you calculate your deduction for working from home expenses.

Using this method, you:

• can claim 80 cents per hour for each hour you work from home
• can’t claim any other expenses for working from home, even if you bought new equipment.

The shortcut method covers all your working from home expenses, such as:

• phone expenses
• internet expenses
• the decline in value of equipment and furniture
• electricity and gas for heating, cooling and lighting.

The shortcut method includes decline in value of all items. If you choose to use this method there is no requirement to separately calculate the decline in value of equipment or depreciating assets or any other working from home expense.

However, as you may need to use a different method to work out your working from the home deduction in later years it’s important to keep the:

• receipts for depreciating assets or equipment you use when working from home
• records of how you calculated your work-related use of the asset
• your decline in value calculations.

Record keeping for the shortcut method

You must have a record of the hours you worked from home, for example, a timesheet, roster or diary.

Calculate your work from home deduction

Use our Home office expenses calculator to help work out your deduction.

Completing your tax return

Once you calculate your deduction, enter the amount at ‘Other work-related expenses‘ in your tax return. Include in the description ‘COVID-19 hourly rate’.

Remember, registered tax agents and BAS agents can help you with your tax.

Source: ATO