Self-isolating? How to get your coronavirus crisis tax claim right

By Mark Chapman | 04 May 2020 View comments

Coronavirus is going to change the way we claim at tax time. Here’s what you need to know  

With the increasing requirement to self-isolate to stop the spread of the coronavirus, millions of Australians have now chosen – or been mandated – to work from home for the foreseeable future. That mean that the tax deductions we normally claim will change. 

Certainly for the final four months of the year, there are likely to be significantly lower claims for expenses such as work-related travel, accommodation and clothing. Similarly, with fewer opportunities to attend courses, there may also be a drop in self-education and professional development expenses.

Conversely, working from home claims are likely to increase significantly as business owners and their employees are forced to self-isolate. 

What can I claim if I work from home?

You can claim for the work-related proportions of household costs such as:

  • Heating, cooling and lighting bills
  • Costs of cleaning your home working area (including cleaning products or payment for a domestic cleaner if required)
  • Depreciation of home office furniture and fittings
  • Depreciation of office equipment and computers
  • Costs of repairing home office equipment, furniture and furnishings
  • Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)
  • Computer consumables (like printer ink) and stationery
  • Phone (mobile and/or landline) and internet expenses

Ideally, you should have a specific room set aside as a home office. If you are using a room with a dual purpose (e.g. dining room), or a room shared with others (e.g. lounge room) you can only claim the expenses for the hours you had exclusive use of the area.

How do I make a claim?

The ATO has introduced a temporary shortcut method of calculating additional running expenses allowing those working from home to claim a rate of 80 cents per work hour during the coronavirus crisis. This will apply from 1 March 2020 until at least 30 June 2020.

The ATO may extend this period depending on when work patterns start to return to normal.

You will need to keep a record of the number of hours you have worked from home as a result of COVID-19. 

If you use the 80 cents per hour method, you can make no other claims in relation to working from home. So, items like mobile phone and internet usage are included in the 80 cent rate.

Alternatively, you can claim the ATO’s existing flat rate allowance for working from home of 52 cents per hour. This covers the extra costs of heating, cooling, lighting and the decline in value of furniture.

All you need to do to claim this is to keep a diary – note the time you start work each day, the time you finish work each day and any breaks. You can then claim 52 cents per hour for each working hour.

In addition, (and this is what makes this rate different to the temporary 80 cent rate) you can also make separate claims for the work-related proportion of items such as your home internet, mobile phone costs and other expenses that directly relate to your work such as stationery and printer ink.

A further option is to claim the actual costs you’ve incurred. You’ll still need to keep a diary of your work from home hours and you’ll also need to work out the amount of your home (by floor area) that you’re using as your work space.

From this, you can then work out the work-related proportion of your household expenses and apply this percentage to the actual amount you spend on electricity, gas, water, phone and internet, etc. You’ll also need to keep all the original bills to prove your claim.

This generally produces a bigger claim than either of the flat rate methods but the amount of paperwork and calculation involved is much greater. You should use a tax agent to help with your claim if you intend to use this method.