The easy $1,600 tax deduction many of us can claim this year
If you've still been working from home at all in the past year you can claim money back in your tax return.
The Australian Tax Office (ATO) has extended its work-from-home blanket tax deduction for a third year now. A lot of people, especially in New South Wales and Victoria, were still in lockdown conditions toward the end of 2021 and therefore still working remotely. Even since lockdowns have lifted, many people are still working from home instead of going into the office.
Because of this, the ATO is again allowing you to claim 80 cents for each hour that you've worked from home over the past financial year.
How the work-from-home tax deduction works
If you've worked from home at any point over the last financial year you're allowed to claim this as a tax deduction. You don't need to have worked from home full time – you can still make a claim even if you've only worked at home for a few weeks or months of the past year.
You can claim 80 cents for each hour that you worked from your home, which is a blanket deduction to cover all your home-office costs. This deduction helps cover expenses like your home electricity costs and Internet bills and saves you from having to work out individual deductions for all of these things.
As an example, let's say you worked from home full time for the past year. Assuming you worked 8 hours per day for 250 days (this is 5 days a week minus the 10 public holidays), that's a total of 2,000 hours. Using the 80 cents per hour method, you can claim a tax deduction of $1,600 in your tax return.
If you've worked even longer hours than this, you can claim more. If you've only worked a couple of days per week from home, you'll need to adjust your calculations and claim less.
You can claim the hours you worked from home between 1 July 2021 and 30 June 2022. You can only claim if you've incurred the expenses yourself and your employer hasn't given you an additional allowance to cover your home running costs.
You also need to be able to show some sort of record of your hours spent working from home, such as payslips, rosters, time sheets or diary logs. You don't need to submit this with your claim, but you need to be prepared to show it if the ATO requests it. The ATO has already said these working-from-home deductions will be a focus this year, so be prepared to show your calculations if you're asked to.
You are also able to claim a deduction using the standard home office calculations if you want to, instead of the 80 cents per hour rule. This allows you to claim the actual costs of your running expenses while working from home, and requires a few more calculations and also requires records of your expenses. It's worthwhile doing both calculations to see which method gives you the biggest deduction.
If you're not eligible to claim this working-from-home deduction, there are still plenty of other tax deductions you can claim at tax time.