The shortcut method of claiming work from home (WFH) expenses ends 30 June 2022.

The shortcut method commenced in March 2020, when many Australians transferred to working from home, the 80c per hour shortcut rate required taxpayers to keep a record of how many hours were worked from home, instead of having to record and claim detailed expenses.

According to the Australian Taxation Office, the shortcut was worth around $1,500 annually for the average taxpayer, but it won’t be extended after 30 June.

What does this mean for the future?

Those who work from home will have to keep detailed records to claim expenses and can use the Fixed Rate Method or Actual Cost Method.

Fixed Rate Method

If you have a dedicated working area at home and working from home incurs running expenses for you, you can claim the fixed rate. If you don’t have a dedicated work area, such as a room for an office, you may only be able to claim minimal additional running expenses.

The fixed rate is 52 cents per hour worked from home. You can use the fixed rate method to work out your deduction for working from home expenses as long as you meet record keeping requirements and record the hours spent working from home.

Use the Australian Tax Office – Home office expense calculator to work out your deductions.

Actual Cost Method

To work out the actual cost of deductions with the Actual Cost Method, you must keep detailed records of the additional expenses incurred by you working from home, such as:

• Decline in value of depreciating assets (use the depreciation and capital allowances tool)
• Cleaning expenses (dedicated work area)
• Electricity and/or gas for heating, cooling and lighting
• Phone and internet
• Supplies such as stationery, printer toner or ink, etc.

You can only claim if you incur additional expenses as a result of working from home. Use the Australian Tax Office – Home office expense calculator to work out your deductions.

For both fixed rate and actual cost methods, you can claim an immediate deduction for the cost of a depreciating asset if the cost doesn’t exceed $300.

To get the most out of your return and ensure an accurate return, speak to our tax team today on 03 5443 0344 or email afs@afsbendigo.com.au