Do your homework when working from home
TECHNOLOGY-driven changes to the employment market are seeing record numbers of Australians claiming deductions for expenses incurred while working from home.
But a high level of mistakes, errors and questionable claims have prompted the Australian Taxation Office (ATO) to increase attention, scrutiny and education for home office expenses this tax time.
Assistant Commissioner Kath Anderson said that last year, 6.7 million taxpayers claimed a record $7.9 billion in deductions for ‘other work-related expenses’ which includes expenses related to working from home.
“There is a rising trend of employees working from home, and while extra costs related to working from home are usually deductible, we are seeing some taxpayers either over-claiming or claiming private costs,” she said.
“There is mounting evidence that many taxpayers don’t know what they can and cannot claim.
“In particular, we are seeing some taxpayers claiming expenses they never paid for, expenses their employer reimbursed, private expenses and expenses with no supporting records,” Ms Anderson said.
Taxpayers can legitimately claim additional costs incurred as a direct result of working from home, but need to be careful not to claim private expenses as well.
“Claims for the work-related portion of expenses like phone, internet, depreciation of your computer, printing and stationary are all allowed,” she said.
“But one of the biggest issues we are seeing is people claiming the entire amount of expenses like their internet or mobile phone, not just the extra bit related to work. “In reality, the rest of us are subsidising their private phone calls and internet usage, which is not okay.”
According to Ms Anderson, the additional costs of running expenses like electricity for heating, cooling and lighting are deductible, but you need to be able to demonstrate that there were additional costs.
While employees can claim additional running costs associated with working from home, occupancy costs are limited.
“Employees cannot generally claim occupancy-related expenses like rent, mortgage repayments, property insurance, land taxes and rates,” Ms Anderson said.
She warned that employers are sometimes contacted to verify expenses.
According to Ms Anderson, record-keeping is a key focus area for the ATO this year.
For more information: visit ato.gov.au/Individuals/Incomeand-deductions/Deductionsyou-can-claim/Home-officeexpenses/
To find the home office calculator, visit ato.gov.au/calculators-and-tools/home-officeexpenses-calculator/