COVID-19 has led to the majority of the population working at home for several weeks and this will mean tax time will be different this year.

The Australian Taxation Office (ATO) said this week it expects a big hike in people claiming working from home deductions.

The ATO launched a ‘short-cut method’ that applies between March 1 and June 30. For that period, people will be able to claim a flat rate of 80c per hour for all their running expenses rather than having to calculate specific costs.

In short, all taxpayers have to do is record the number of hours worked from home rather than each item for that period.

People claiming their working from home expenses using the shortcut method, are advised to include the amount in response to the ‘other work-related expenses’ question in their tax return and include ‘COVID-hourly rate’ as the description.

“If you use the shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim,” Assistant Commissioner Karen Foat said.

“But it is all inclusive, meaning you can’t claim for any other working from home expenses.”

And for people who were working from home before COVID-19, they will have to calculate all their individual expenses outside of the March 1 to June 30 period as they did previously.


Commuting still not tax deductible

As a result of COVID-19, the ATO is expecting decreased deduction claims for travel expenses for this financial year.

When it comes to claiming travel expenses, you must have spent it and not been reimbursed, it must be related to earning income and you must have a record to prove it.

The ATO also reminded taxpayers that commuting between work and home is not tax deductible.

Foat said the ATO recognised every individual taxpayer’s circumstances were different, but warned people to be careful when calculating their deductions.

“What you can claim really depends on your circumstances. Whilst we are trying to make it easier for people to claim what they are entitled to, we are also asking people to take a bit of extra care if their circumstances have changed this year,” she said.

The financial year ends on June 30 and the ATO’s lodging deadline remains October 31.