Understanding the ins and outs of working from home tax claims is crucial for remote workers when maximising tax returns.  Plus, you want to stay on the right side of the ATO. Here are some handy working from home tax tips from H&R Block’s Mark Chapman.

Check your paperwork

If you want to make a claim for work-related expenses, you need to follow the three golden rules:

  • The expense must relate to your work
  • You mustn’t have been reimbursed by your employer
  • You must be able to prove that you spent the money. That means that you must keep receipts, invoices or statements to demonstrate that you actually incurred the expense.

My tip is to keep electronic copies of all documentation relating to expenses. Paper receipts get lost or fade, so keeping everything together on your phone or computer will save time and effort when you come to complete your tax return.

Take some time out to gather together all the information you will need to help you prepare your tax returns, including invoices and receipts for work-related expenses and any bank/credit card statements that contain items of work-related expenses that you no longer have (or never had) receipts or invoices for.

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If you’re not sure if it’s claimable, collect together the receipt or invoice anyway and discuss it with your tax agent. If you don’t have the paperwork, you can’t claim a deduction so it makes sense to set aside this time in advance of the end of the financial year to spare yourself a stressful document hunt whilst you’re actually in the process of getting your return prepared!

In addition, if you’re claiming any expenses that have a work-related element and a private element (such as for the use of a personal mobile phone) set some time aside to work out what a reasonable apportionment is for the work-related bit.

Do some last-minute planning

As we’ve not yet reached the end of the financial year, it’s not too late to generate some additional tax deductions this tax year:

  • If you have any professional subscriptions or union fees due, pay by 30 June and you can claim the deduction for the whole amount this year.
  • Charitable donations are tax-deductible – anything over $2 – with a receipt – paid to a charity registered as a deductible gift recipient (which covers most major charities) will be deductible.
  • If you use a bag for work, to carry papers or a laptop perhaps, you can claim a tax deduction for the cost. That could include a briefcase, a backpack or a handbag, whichever suits your needs.
Working from home tax tips for remote workers

Claim for costs arising from working from home

If you work from home, either occasionally or all the time, you are entitled to deductions for costs arising from working at home. The expenses that you can claim include:

  • heating, cooling and lighting
  • cleaning costs
  • decline in value (depreciation) of home office furniture and fittings, office equipment and computers (for items over $300)
  • computer consumables, stationery, telephone and internet costs
  • items of capital equipment (for example furniture, computers and associated hardware and software) that cost less than $300 can be written off in full immediately.

Can I claim for tea or coffee costs?

You can’t claim for things like tea, coffee and toilet paper, which would be provided if you work in an office, but are actually private expenses when bought for home.

You can claim actual costs but you’ll need copies of all invoices plus a reasonable estimate of the percentage split between work-use and private-use. Or, alternatively, use the ATO fixed rate of 67 cents per hour.

Don’t forget, to claim the fixed rate, you must be able to prove the number of hours you worked from home during the entire tax year, so you’ll need a diary, copies of timesheets or rosters.

Important: You can’t make a separate claim for mobile phone use if you have claimed the fixed rate method for working from home. Mobile phone calls – wherever they are made – are included in the 67 cents per hour rate.

Working from home tax tips by Mark Chapman, Director of Tax Communications at H&R Block.