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ATO rolls out working-from-home deduction shortcut

Under the new arrangement, taxpayers will be allowed to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.

The requirement to have a dedicated work-from-home area will also be removed, with multiple people in each household allowed to claim the new rate.

The new method will cover the period starting 1 March 2020 until 30 June 2020, with the ATO open to extending the method depending on when work patterns start to return to normal.

Tax agents or self-lodgers must include the note “COVID-hourly rate” in 2019–20 tax returns should they nominate to use the new method.

The simplified method will cover all deductible running expenses, including electricity for lighting; cooling or heating and running electronic items, phone and internet costs; and the decline in value of a computer, laptop, home office furniture and furnishings.

Under the fixed-rate method, these running expenses were calculated at the rate of 52 cents per hour, with phone and internet expenses and decline in value on computers needed to be calculated separately.

The new arrangement will require records of the hours worked at home and can be in the form of timesheets or diary notes.

ATO assistant commissioner Karen Foat said the new shortcut method would make tax time easier for those who were working from home for the first time in light of the ongoing coronavirus pandemic.

The new method will be supplementary to the fixed-rate method and the actual cost method of calculating running expenses, with taxpayers able to choose the appropriate method for their circumstances.

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