ATO Extends Work From Home Shortcut Method | 2021 - 2022

ATO Extends Work From Home Shortcut Method

COVID-19 pandemic has made many individuals work from home. According to the Australian Bureau of Statistics (ABS) data in June 2021 37% of people with jobs one or more times a week compared to 24% in March 2020. In Victoria, 57% of people worked from home throughout the lockdown. It is expected that the working from home trend will last for some period until the pandemic fully wipes away.

The Australian Tax Office has extended the all-inclusive temporary shortcut method to calculate these working from home individual’s deduction amounts by 12 months to 30th June 2022 which is the 2021-22 income year.

So, the expenses covering 1st March to 30th June 2020 of 2019-20 income year, 2020-21- and 2021-22-income years will be covered. The whole purpose of extending the shortcut method is because there are still the majority of workers engaged in the work from home method and it simplifies the calculation of work from home claims.

Ato Extends Work From Home Shortcut Method - 2021-2022

Calculation of Shortcut Method

Through this method, taxpayers can claim 80 cents per hour for all the expenses associated with working from home. The calculated deduction can be shown under the ‘Other work-related expenses’ in the tax return with the description ‘Covid-19 hourly rate’. This will be a flat rate applicable for the time they spend working from home.  The allowable expenses include:

  • Electricity and gas for heating, cooling, and lighting
  • Decline in value for equipment and furniture
  • Phone and internet expenses

All the working from home individuals will have to prove that they worked from home for the particular hours. A diary entry, roster, or a timesheet recorded and approved each day would be enough justification.

Critics for Shortcut Method

Although this method is simple and easy there are a lot of critics for the method. One critic is the difficulties that the individuals face in distinguishing the expenses like electricity, heating, and internet for office usage and home usage. So, the individuals who work from home have to separately identify the expenses in the similar way they did for their fueling reimbursements before. Individuals do not need to have their dedicated work-from-home area.

After 30th June 2022 the individuals who work from home will have to use the Fixed-rate method which is 52 cents per hour or the Actual cost method which allows deducting the actual expenses incurred to produce the income of working from home. Also, individuals should keep in mind that the shortcut method is not compulsory. Individuals still can claim expenses based on the actual expenses incurred. But the actual expenses method is more complex and has a lot of record-keeping requirements.