Working from Home Deductions: “Shortcut” Rate until 30 June 2021

The ATO has again extended – this time from 31 December 2020 to 30 June 2021 – the application of the “shortcut” rate outlined in Practical Compliance Guideline PCG 2020/3 for claiming work-from-home running expenses.

As amended on 17 December 2020, PCG 2020/3 allows eligible taxpayers to claim additional running expenses incurred between 1 March 2020 and 30 June 2021 at the rate of $0.80 per work hour, provided they keep a record of the number of hours worked from home. Taxpayers eligible to use the shortcut rate are employees and business owners who:

• work from home to fulfil their employment duties or to run their business during the period from 1 March 2020 to 30 June 2021; and
• incur additional running expenses that are deductible under s 8-1 or Div 40 of the Income Tax Assessment Act 1997 (ITAA 1997).

The additional running expenses covered by the shortcut rate are listed at para 26 of PCG 2020/3 and comprise lighting, heating, cooling and cleaning costs, electricity for electronic items used for work, the decline in value and repair of home office items such as furniture and furnishings in the area used for work, phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device. Crucially, taxpayers who decide to use the shortcut rate to claim a deduction for their additional running expenses cannot claim any further deductions for the listed expenses.

Other Options

Taxpayers who choose not to use the shortcut rate can:

• claim $0.52 per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture (in accordance with Law Administration Practice Statement PS LA 2001/6), plus the work-related portion of phone and internet expenses, computer consumables and stationery and the work-related portion of the decline in value of a computer, laptop or similar device; or
• claim the actual work-related portion of all running expenses, which need to be calculated on a reasonable basis.

Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.