Monthly tax tip:
It is now January and that means taxpayers can no longer claim the shortcut method for home office expenses (80 cents per hour working from home between 1 March and 31 December 2020). Since the COVID-19 lockdowns, many taxpayers are choosing to continue to work from home – but how can they now claim their home expenses that are used for work? The fixed rate method allows a taxpayer to claim 52 cents per hour working from home which covers depreciation of furniture, electricity and repairs made to home office equipment. This method does not cover expenses relating to phone, internet, printing/stationery and the depreciation of computer equipment so these expenses would need to be calculated separately, including receipts and logbooks kept to show the calculation of the claims.
The other method available is the actual cost method. This method allows you to claim for all home office expenses (e.g. electricity, phone, internet, depreciation of furniture and office equipment, etc.) but you would need to calculate the portion they relate to work – which can deter taxpayers from using this method as opposed to the fixed rate method. This method would require substantiation to show how each expense was calculated, e.g. diaries, receipts, logbooks and phone call logs, so you must be a good record keeper. We recommend keeping substantiation for both methods so the claims can be compared and the highest claim is used. If you are unsure what records must be kept or how you would claim the expenses for your home office then please contact our office so we can advise you.
If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.