Working from home expenses + ATO focus areas
Tax Compliance

Working from home expenses + ATO focus areas

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MB+M Business Services Team introduces: Working from home expenses + ATO focus areas

In this article, we will cover Covid-19 related work expenses you may be eligible to claim deductions for as well as various working from home expenses. Lastly we will highlight the 2022 ATO tax time key priorities to focus on when doing your tax return. It is important to constantly ask yourself when making a tax deduction claim, does the expense incurred directly relate to you earning income? If yes, read ahead!

Covid-19 work expenses you may be able to claim

Covid-19 safety gloves, mask, sanitiser

Depending on your industry, your approach to work and how you function day-to-day may have changed due to the Covid-19 pandemic.
For example, you may have had to purchase something that would allow you to work safely in the presence of the virus (personal protective equipment (PPE), Rapid Antigen Tests). For Rapid Antigen Tests (RAT), you will need to prove that you purchased the test yourself and were not reimbursed by your employer if you would like to claim a deduction. Furthermore, you can only claim a deduction for the tests used to prove you were COVID negative to attend work – not necessarily every test you’ve taken.

ATO Assistant Commissioner Tim Loh states, “If you purchased a COVID-19 test for a trip with your mates, you can’t claim a deduction”.

Some occupations have pandemic-related expenses that aren’t covered by your employer, for example, gloves, face masks, sanitiser. “This will be most common in industries such as retail, cleaning and hospitality”. Make sure you have proof to substantiate your claims!

Working from home?

While the MB+M team are back in the office, you may be still working from home, or have adopted a hybrid working environment. If you have a flexible office/home arrangement, you can claim deductions for costs you have incurred due to working from home. There are certain things you should be cautious of (and the ATO are looking out for – see below), so it pays to take your time and calculate your claims. Add in the extra complexity of working in the office on a limited basis means you will have to calculate your expenses on a day-to-day basis.

We at MB+M are happy to help if you have any follow up questions about the below potential claims.

Home office with computer and plantOccupancy + location:
It depends where your home office is located within your house. Is it in a shared room where the room serves another purpose? Some occupancy costs (such as rent, land tax, mortgage interest) can be claimed under limited circumstances. Expenses can only be claimed for the hours you use it as an office.

Home office equipment:
You may be able to claim costs related to running office equipment, such as telephones, printers, computers. You could either claim the full expense if total is less than $300. Similarly, if the item costs $300 or more, claim a decline in value.
If you had to purchase furniture for your home office, you may be able to claim a deduction on items such as desks, bookshelves, and cupboards.

How much can you claim?
If you follow the rules, correctly calculate the total amount, and have evidence to substantiate your claims, you can claim any amount you think you can receive

Calculating all the expenses at tax time can be exhausting, and you might miss out on certain deductions. That is why we recommend hiring a professional tax return agent who can help. Please call MB+M on 5821 9177 and we can help you through the process.

ATO’s 4 priorities this tax time

The ATO will be focusing on a few key areas to ensure individuals are doing the right thing and paying the right amount of tax. The key areas are where individuals make the most mistakes.
For 2022, these are:

  • record-keeping
  • work-related expenses
  • rental property income and deductions
  • capital gains from crypto assets, property and shares

Assistant Commissioner Tim Loh explained that “The ATO is targeting problem areas where we see people making mistakes.” “It’s important you rethink your claims and ensure you can satisfy the 3 golden rules” Mr Loh added.

ATO’s 3 golden rules:

  1. You must have spent the money yourself and weren’t reimbursed
  2. If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income
  3. You must have a record to prove it

ATO magnify glassTo claim a deduction for your working from home expenses, there are three methods available depending on your circumstances. You can choose from the shortcut (all-inclusive), fixed rate and actual cost methods. However, you must meet the eligibility and record-keeping requirements for the chosen method.

The ATO reminds taxpayers that not all information will be prefilled for individuals. For example, information on rental income, foreign sourced income and capital gains. You will therefore need to ensure that all the information is included to avoid being caught up in the ATO data-matching programs later on.

Disclaimer:
The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on information on this website you should consider the appropriateness of the information to your situation and needs.

You can read more about what you can and can’t claim here: Is it tax deductible? – MB+M Group

Sources:
Four priorities for the ATO this tax time | Australian Taxation Office

Tax time 2022: The COVID-19 work expenses Aussies may be able to claim (9news.com.au)

Tax time 2022: ATO focus areas – Garnet Business Services (garnetaccounting.com.au)

Work From Home Tax Deductions For 2022 – Palladium Financial Group