Generally, expenses associated with your home are private in nature and do not qualify as a tax deduction. However, if part of your home is used for genuine work related activities or business purposes, the ATO have recognised that they may be deductible for the following two categories:
- A portion of occupancy expenses (eg interest on mortgage, rent, rates and building insurance) only where your home has the character of a place of business
- Additional running expenses (eg electricity, gas, cleaning and office furniture) regardless of whether it qualifies as a place of business
Generally, a deduction can only be claimed for tax purposes where the relevant expense:
- has been incurred by you (not paid for by someone else)
- has sufficient connection with your income
- can be verified or substantiated
The ATO has released a new simplified short cut method for running expenses incurred where you are genuinely carrying out employment duties due to COVID-19 during the period 1 March 2020 to 30 June 2020
Under this method, the ATO will allow you to claim a deduction for all running expenses incurred in that period based on a rate of 80 cents for each hour you work from home.
This rate covers the following expenses
- electricity and gas expenses
- depreciation of office furniture
- cleaning
- phone expenses
- internet expenses
- computer consumables
- stationary
- depreciation of computers or devices
You do not need a dedicated or separate area at home in order to claim this method of home office deductions.
This method is optional and alternative to claiming the additional home office running expenses under the normal claiming methods