# ATO publishes new guidance on claiming deductions while working from home due to COVID-19



## Jack Malarkey (Jan 11, 2016)

The Australian Taxation Office on 9 April
2020 released Practical Compliance Guideline PCG 2020/3 concerning a shortcut method of $0.80 an hour for claiming deductions while working from home due to COVID-19:
https://www.ato.gov.au/law/view/doc...01&dc=false&stype=find&tm=phrase-basic-2020/3.

Tax accountants Pitcher Partners have provided a good overview of PCG 2020/3:

*ATO publishes new guidance on claiming deductions while working from home due to COVID-19*

By Stuart Dall-April 24, 2020

Many Australians are now working from home to ensure business continuity amidst the COVID-19 pandemic. As a result, the Australian Taxation Office ("ATO") is expecting an unprecedented amount of home office related tax deductions this financial year. The ATO has provided new guidance on what can be claimed.

*What does the new guidance allow?*

The ATO has published a new "shortcut" method[1]for calculating the deduction available to an individual for additional running expenses incurred as a result of being required to work from home during COVID-19. Under this shortcut method, an employee or business owner will be allowed to claim $0.80 for every hour that is worked at home.

This hourly rate covers all additional running expenses, including electricity and gas (heating) expenses, depreciation[2] of and repairs to home office furniture and equipment (including computers or similar devices), computer consumables, telephone (depreciation, plan and call costs) and internet expenses and cleaning expenses.

An individual using this shortcut method cannot claim further deductions for additional running expenses.

An individual wishing to use the shortcut rate will need to keep a record of the hours they have worked at home. This could be in the form of timesheets, rosters, a diary or similar document that sets out the hours worked.

*Who can use this shortcut method?*

The shortcut method can be used by any individual - employee or business owner - who is working or running their business from home and incurring additional running expenses as a result.

An individual using this shortcut method will need to keep a record (in the form of timesheets, rosters, a diary or similar document) of the hours they have worked at home.

*When does the new shortcut method apply?*

The shortcut method applies to the period from 1 March 2020 to the date the ATO guidance is withdrawn.
...
*How does an individual calculate deductions where home is not a place of business?*

An individual in this situation could use the ATO's new shortcut method described above, the ATO's pre-existing fixed hourly rate method[3] or calculate the work-related proportion of actual expenses incurred.

Fixed hourly rate

The current fixed rate is $0.52 per hour for every hour worked from home. This rate covers home electricity and gas (heating), cleaning and depreciation of home office furniture and furnishings. A diary of the hours worked from home is required to substantiate the deduction claimed.

Unlike the new shortcut method, the hourly rate of $0.52 per hour does not cover computer consumables, stationery, phone and internet expenses or depreciation of a computer or similar device. The work-related portion for those items needs to be separately calculated.

Actual expenses

Where the individual has a dedicated work area, a proportion of the actual running expenses can be claimed.

The allowable deduction for heating, cooling and lighting, involves two key steps:

Work out the average cost of each unit of power used (set out in relevant utility bills).
Determine the average units of power consumption per kilowatt-hour for each appliance, piece of equipment or light used.
The amount obtained by multiplying the results of the two steps above gives the annual running cost for each appliance, equipment or light used. The deduction available is then the annual running costs multiplied by the total annual hours worked at home.

For this method, a record of hours worked from home will need to be maintained as well as records to substantiate the amount claimed.

*Does claiming working from home deductions impact the main residence exemption?*

Entitlement to the capital gains tax (CGT) main residence exemption is not impacted where the home is not a place of business (that is, deductions are only available in relation to the business proportion of running expenses).

However, if the home is a place of business with a deduction claimed for the business proportion of occupancy expenses, entitlement to the main residence exemption will be impacted.
...

[1] Set out in _Practical Compliance Guideline __PCG 2020/3_.

[2] The tax technical term for depreciation is decline in value.

[3] Set out in _Practice Statement Law Administration __PS LA 2001/6_.

(https://www.pitcher.com.au/news/ato...ng-deductions-while-working-home-due-covid-19)


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## Jack Malarkey (Jan 11, 2016)

I use the shortcut method to claim running expenses for rideshare-related work done at home.

I wondered whether from 1 March 2020 I should continue to claim $0.52 per hour worked at home or whether I should shift to the $0.80 rate per hour under the new COVID-19 arrangements.

Unlike the $0.52 hourly rate, the $0.80 hourly rate also encompasses computer consumables, stationery, phone and internet expenses, and depreciation of a computer or similar device. It also prevents separate claims for these expenses.

My quick calculations revealed that not being able to claim my mobile phone plan expenses alone would mean that I was worse off under the $0.80 rate.

So I will continue with the $0.52 rate and make separate claims for any of the expenses referred to above.

I expect other rideshare drivers would be in the same position.


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## Jack Malarkey (Jan 11, 2016)

Australian Taxation Office:









https://www.ato.gov.au/individuals/...eductions-you-can-claim/home-office-expenses/


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## Jack Malarkey (Jan 11, 2016)

The temporary working from home shortcut method of 80 cents per hour has now been extended to 31 December 2020:

*Home office expenses*
If you're an employee who works from home, you may be able to claim a deduction for home office expenses.







www.ato.gov.au


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