Still need to lodge your tax return? The ATO is looking closely at WFH deductions
The tax return deadline is 31 October. We spoke to a tax expert to let you know how to correctly claim your work-from-home (WFH) deductions.
If you're one of the many Australians who worked from home during the 2021/2022 financial year, you would be happy to know you can claim your home office running expenses on your tax return.
However, you should be wary of incorrectly claiming your WFH deductions or accidentally overclaiming.
Finder spoke with Elinor Kasapidis, senior manager of tax policy at CPA Australia, who said that Australians should make sure they are applying the right method to calculate their claim. "The ATO is taking a close look at work-from-home deductions this year," she said.
How should I claim my work-from-home expenses?
To help Aussies claim WFH expenses, the ATO introduced a "shortcut" method during the pandemic. This method has been extended for the 2021/2022 tax year, allowing you to claim 80 cents for each hour you've worked from home between 1 July 2021 and 30 June 2022.
If you've worked from home for the majority of the year, this method potentially allows you to claim a tax deduction of $1,600 in your tax return or even more depending on the hours you've worked.
Following this, Kasapidis said accountants have noticed a common deduction error of "people claiming depreciation expenses for individual items while also using the shortcut method for work from home".
How claiming depreciation expenses works
You can claim a deduction for the decline in value of your depreciating assets. The amount you can claim will vary if you use it for business or personal purposes. For example, if you use a depreciating asset 70% for business purposes and 30% for personal use, you can only claim 70% of its total depreciation on your tax return.
You can't use both the shortcut method and claim depreciation expenses for individual items. But it is worth doing both calculations to see which gives you the bigger deduction.
Note that you shouldn't be concerned if you're claiming correctly.
"You shouldn't be worried at tax time if you're making an appropriate claim and have the right documentation," Kasapidis said.
This is the last year the ATO will allow you to use the shortcut method. For the 2022/2023 tax year, you will need to go back to using the previous fixed rate method. This allows you to claim 52 cents for every hour you have worked from home.