Work-related expense deductions

Do you know what you can and can’t claim during tax time? Lodging your tax return is easy with the ATO’s work-related expenses guide for sales and marketing workers. 

When completing your tax return, you may be able to claim deductions for some work-related expenses. 

To claim a work-related deduction: 

• you must have spent the money yourself and weren’t reimbursed 
• it must directly relate to earning your income 
• you must have a record to prove it. 

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion. Common deductions for sales and marketing workers can include: 

• Car and travel expenses 
• Clothing and self-education expenses 
• Home office expenses 

Remember to report all income in your tax return and remove any portion of your expense that is not work-related. 

Working from home

 If you have been working from home, you may have expenses you can claim a deduction for at tax time.

Tracking these expenses can be challenging, so ATO has introduced a temporary shortcut method. It’s a simple way to calculate these expenses with minimal record keeping requirements. The shortcut method initially applied from 1 March to 30 June 2020, however it can now be applied up until 30 June 2021.

You can use the shortcut method to calculate your working at home expenses for the period between:

• 1 March to 30 June 2020 in your 2019–20 tax return
• 1 July to 30 June 2021 in your 2020–21 tax return.

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

In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.

For more information about working from home prior to 1 March 2020, or the other methods you can use to calculate your working from home expenses, visit Home office expenses.

Calculating your expenses

For the 2019–20 income year, there are three ways of calculating home office expenses depending on your circumstances. The methods are the:

• Shortcut method (80 cents per work hour) – available 1 March to 30 June 2020 (this method can also be used during the period from 1 July 2020 to 30 June 2021 but that period will need to be claimed in your 2020–21 tax return)
• Fixed rate method (52 cents per work hour)
• Actual cost method.

You don’t have to use the shortcut method. You can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome, as long as you meet the criteria and record keeping requirements for each method.

Shortcut method

You can claim a deduction of 80 cents for each hour you worked from home for the period between:

• 1 March 2020 to 30 June 2020 in your 2019–20 tax return
• 1 July 2020 to 30 June 2021 in your 2020–21 tax return.

If you:

• were working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls
• incurred additional running expenses as a result of working from home.

The shortcut method doesn’t require you to have a dedicated work area, such as a private study.

The shortcut method covers all additional deductible running expenses, including:

• electricity for lighting, cooling or heating and running electronic items used for work (for example, your computer), and gas heating expenses
• the decline in value and repair of capital items, such as home office furniture and furnishings including capital items that cost less than $300
• cleaning expenses
• your phone costs, including the decline in value of the handset
• your internet costs
• computer consumables, such as printer ink and stationery
• the decline in value of a computer, laptop or similar device.

You don’t have to incur all these expenses to use the shortcut method, but you must have incurred additional running expenses in some of these categories when working from home.

If you use this method, you can’t claim any other expenses for working from home for that period.

When you are calculating the number of hours you worked from home, you need to exclude any time you took a break from working.

You can calculate your working from home deduction using the shortcut method, with this formula:

• total number of hours worked from home from 1 March 2020 to 30 June 2020 × 80 cents (for the 2019–20 income year)
• total number of hours worked from home from 1 July 2020 to 30 June 2021 × 80 cents (for the 2020–21 income year).

If you use the shortcut method to claim a deduction, include the amount at the other work-related expenses question in your tax return and include ‘COVID-hourly rate’ as the description.

Click here for more information about income and work-related deductions, or to download the guides available specifically for marketing professionals.