# ATO: Is home your main place of business?



## Jack Malarkey (Jan 11, 2016)

From the Australian Taxation Office’s small business newsroom:









Is home your main place of business?


You may be able to claim home-based business expenses.




www.ato.gov.au






*Is home your main place of business?*










*13 September 2021*

If you’re a sole trader or operate your business as a partnership, you may be able to claim some running expenses if your home is your main place of business. This can include the cost of electricity, cleaning and depreciation of business assets.

You can use one of the following methods to calculate your expenses:

actual cost method
52 cents per work hour fixed rate, which covers heating, cooling, lighting, cleaning and depreciation of furniture and furnishings
80 cents per work hour temporary shortcut method, available from 1 March 2020 to 30 June 2021 and covers all expenses.
The methods cover different expenses so keep good records and check the details to see which works best for you.

You may also be able to claim occupancy expenses if you have a specific area of your house with the character of a ‘place of business’ set aside. This would not include, for example, your dining room table.

If your business is a trust or company, you should have a market-rate rental contract. This will determine what expenses you may be able to claim as a deduction.

You can only claim deductions for the portion of your expenses related to running your business.

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

*Find out about:*

Claiming a tax deduction for expenses for a home-based business
Small business home-based business expensesExternal Linkfact sheet
*See also:*

Business tax deductions


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## Jack Malarkey (Jan 11, 2016)

See also:









Home-based business and CGT implications


Generally, when you sell your home CGT doesn't apply. However, if you used any part of your home for business purposes, you may have to pay CGT.




www.ato.gov.au


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## Jack Malarkey (Jan 11, 2016)

_Accountants Daily_

Monday 25 September 2021

Jotham Lian



Redirect Notice



*ATO coy on work-from-home deduction shortcut*

The ATO says it will make a decision soon on a possible extension of the home office expenses shortcut method as large swathes of the country remain homebound under public health orders.

The temporary shortcut method, which expired on 30 June this year, allows taxpayers to claim a fixed rate of 80 cents an hour for all running expenses incurred as a result of working from home, as opposed to calculating costs for specific expenses.

It was introduced in April 2020 at the start of the pandemic and was extended on three separate occasions as lockdowns became a regular feature of Australia’s response to the health crisis.

The ATO told Accountants Daily that the shortcut method was always intended to be a temporary measure and was originally brought in to help taxpayers “who found themselves unexpectedly working from home for the first time during the pandemic and so would unlikely have been prepared for the normal record keeping requirements”.

However, with rolling lockdowns ongoing in Sydney, Melbourne, and Canberra, the Tax Office said it would now contemplate reintroducing the shortcut method.

“We are mindful that many Australians continue to find themselves working from home,” said an ATO spokesperson.

“As a result, we are assessing the working from home methods for the 2021-22 financial year and expect to be able to provide information about this shortly.”

Chartered Accountants ANZ tax leader Michael Croker has urged the ATO to expedite its review, noting that clarity on the issue would allow tax agents to confidently advise clients at tax time.

“At a time when many tax agents are helping their individual clients to prepare their tax return for 30 June 2021, the 80-cent deduction is often discussed and the obvious question clients ask is whether they can calculate the same deduction for FY 2022,” said Mr Croker.

“Logic would suggest it should continue on the grounds of simplicity. After all, many in NSW and Victoria remain in lockdown and must work from home.”

Accountants also believe the shortcut method should be reinstated in light of ongoing lockdowns, with BDO tax partner Mark Molesworth going one further and urging the ATO to make it a permanent feature of the tax system.

In the meantime, the ATO has reminded taxpayers to continue to keep good records now to be afforded the flexibility of choice between home office expense methods next tax time.


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## Jack Malarkey (Jan 11, 2016)

_Accountants Daily_

Monday 18 October 2021



Redirect Notice




*Work-from-home shortcut method extended *

The ATO has confirmed it has extended the work-from-home shortcut method until the end of June 2022.

In response to “continued extenuating circumstances of COVID-19” and further lockdowns since 1 July, the Tax Office said it has extended the deduction shortcut until 30 June 2022.

This will see taxpayers able to claim the 80 cents per hour temporary shortcut method to calculate working from home deductions. The ATO flagged that the existing fixed-rate method (52 cents per hour) and the actual cost method are still available options for members or clients to use.

“To give your clients’ the flexibility to choose the method that will give them the best outcome at tax time, it’s important to remind them of the eligibility requirements and to keep the right records now,” deputy commissioner, individuals and intermediaries, Hoa Wood said.

“For the 2022-23 tax return, we are looking to modernise the 52 cents per hour fixed rate method and make it easier and simpler to use, given that more Australians will be working from home in the longer term.

“More on this later, but in the meantime we hope the extension of the shortcut method continues to provide administrative support for clients finding themselves working from home in unprecedented times.”

Institute of Public Accountants general manager of technical policy Tony Greco said the announcement by the ATO is a welcome one.

“We have been eagerly awaiting this announcement which will be well received by most taxpayers that have been required to continue to work from home during current lockdowns,” Mr Greco told Accountants Daily.

“For most taxpayers this is best option to use as it less administratively less cumbersome and nowhere as restrictive than the alternative methods. For example the alternative methods require you to maintain a dedicated office space which for many taxpayers may be problematic.

“The shortcut method does not require a dedicated office space so it does not matter where you are in the house – It can be the kitchen table or the lounge room for that matter. Also if there are more than one individual per household working from home, then each individual can claim the short cut method independently.”

Mr Greco noted the eligibility rules are considerably straightforward, creating ease for many employees.

“There are eligibility rules but essentially all employees need to do is to keep a track of hours each day they are required to work and multiply it by the 80 cents per hour rate to substantiate their deduction,” he explained.

“There will be individuals where the existing alternative methods may be more beneficial but for most this opportunity to continue to use the short cut method for the current tax year will be a welcome announcement.”

Michael Croker, Tax Leader at Chartered Accountants Australia and New Zealand, echoed a similar sentiment.

“We welcome the extension of the shortcut method which gives Australians a boost of confidence and assurance following the uncertainty of lockdowns,” he said.

“We advocated for this extension as many clients are naturally asking their accountants whether they can use this method for the next financial year while they are helping clients to prepare their current tax return.

“A Productivity Commission papers tell us that in less than two years, we have gone from less than 8 per cent of Australians working from home to 40 per cent which means our tax system must be agile enough to keep pace and adapt.

“With the strong likelihood of workers continuing to work from home at least part of a week going forwards, it is time to consider making this temporary shortcut a permanent feature of Australia’s tax law.”

Confirmation of the ATO’s shortcut method extension comes after prompting from members of the tax profession.

Last month, Mr Croker was among those to urge the ATO to expedite its review into whether or not it would extend the measures, noting that clarity on the issue would allow tax agents to confidently advise clients at tax time.

“At a time when many tax agents are helping their individual clients to prepare their tax return for 30 June 2021, the 80-cent deduction is often discussed and the obvious question clients ask is whether they can calculate the same deduction for FY 2022,” he said at the time.

“Logic would suggest it should continue on the grounds of simplicity. After all, many in NSW and Victoria remain in lockdown and must work from home.”


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