It's not simple - but then tax never is.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
If you are an employee who sets up a home office, there are ways you can save yourself money - and ways you can cost yourself money if you don't do it right.
The Australian Tax Office puts out good advice but you might also do well to talk to an accountant.
What are the basic rules?
If you spend money on behalf of your employer, you can claim it as a cost when you put in your tax form.
But it's not easy working it out.
The ATO divides costs into three types:
- Occupancy expenses: "As an employee, generally you can't claim a deduction for occupancy expenses, which includes rent, mortgage interest, property insurance, land taxes and rates."
- Running expenses like lighting, heating, printer ink, wear and tear on equipment in your home office: "Employees who work from home can claim the work-related proportion of their running expenses."
- Phone and internet: "If you use your phone or internet for work, you can claim a deduction for the work-related percentage of your expenses if you paid for these costs and have records to support your claims."
How do you work it out?
There are two ways of claiming a portion of the cost of running part of your home as an office.
Method 1: You can measure the proportion of your home which is your office in square metres and claim that proportion of your heating and lighting bill. If a quarter of the space at home is office, claim a quarter of the bill.
Method 2: Or you can just claim a flat rate of 52 cents for every hour you work from home in the tax year - so if you work a 40 hour week for 48 weeks of the year, you could claim $998.40 of your annual wages to offset against your income tax.
But what if I buy a special table and an office chair?
You can't claim that as a business expense if you claim the 52 cent deal from the ATO. That sum takes into account all the extra you might spend setting up the office.
Can I claim for the internet and phone?
On top of the running cost of the office, you can claim for the part of your internet and phone is for work.
For the internet, for example, you will have to work out what proportion of internet use is for work and what proportion is for your own and your family's use. For this, accountant Rhys Kyburz of RSM Australia says it's crucial that you keep records.
You might, for example, keep a diary for a month of which hours you use the internet for work and when for yourself. If it's, say, half and half, then claim half your internet bill against tax.
For phone use, it's the same or you can just log calls over a typical month and use that as the average.
READ MORE:
What are the pit-falls?
It depends on whether you own your own home or rent it, according to Robert Ingle, the accountant at ACT Tax Agents.
If you choose to assess your work costs according to how many square metres of your home is for work, you can be liable for capital gains tax when you sell your house. If you rent your home, that would obviously not apply.
Insurance?
If you just switch your place of work from the office to home and you don't meet people through the working day, there is unlikely to be a need for public liability insurance but if members of the public come to your door, then you may well need that insurance. Discuss it with your employer.
What if there's no home office?
The ATO gives the example of James. He is a teacher who marks papers at home. He works with his laptop on the sofa and doesn't have a room set aside for work.
If you're an employee who works from home, you may be able to claim a deduction for expenses relating to that work.
- The Australian Tax Office
The ATO advises: "James can only claim running costs associated with the work he does at home - such as the work-related proportion of the decline in value of the laptop he uses to prepare the reports and the additional cost of lighting, heating and cooling his lounge room. He is also entitled to claim the cost of electricity to power his laptop for the hours he spends working at home."
But if James' family was there watching television, he could only claim for powering the laptop and not for the lighting which they also used.
Should I get special office equipment at home?
You should, according to Rachel Wernert, a physiotherapist and director of Ergosmart Consulting of Kingston in Canberra.
The best height for a desk is 700 millimetres but kitchen tables are often higher than that - her's is 750 millimetres.
"If you are sitting too low, you are likely to hunch and likely to elevate your shoulders and that leads to over-use of the upper trapezium muscles and that leads to neck pain and headaches," she said.
You should get your employer to buy you an office chair which is adjustable - some employees have taken their usual office chairs home, Ms Wernert said. If you do use a higher chair than the usual kitchen chair, you need a rest for your raised feet.
"You do really need to raise your chair," she said, "and that means you need a footstool."
Laptop or desktop?
Desktop, the experts say.
To state the blindingly obvious: laptops are made for laps not desks and desks need desktops.
Rachel Wernert recommends that you either raise the laptop so it's level with your eyes - a stack of books would do the trick and then use a separate keyboard and mouse. Or you could use a separate desktop screen - the laptop keyboard for typing and the bigger, higher screen for looking.
Being comfortable will make doing your tax return easier.
- For information on COVID-19, please go to the ACT Health website or federal Health Department's website.
- You can also call the Coronavirus Health Information Line on 1800 020 080
- If you have serious symptoms, such as difficulty breathing, call Triple Zero (000)
We have removed our paywall from our stories about the coronavirus. This is a rapidly changing situation and we want to make sure our readers are as informed as possible. If you're looking to stay up to date on COVID-19, you can also sign up for our twice-daily digest here. If you would like to support our journalists you can subscribe here.