• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

EtaxLocal

EtaxLocal | Tax Agents | Small Business Accountants

  • Home
  • Business Services
    • Company Tax Return
    • Small Business Tax Returns
    • Partnership Tax Returns
    • Trust Tax Returns
    • BAS Services
    • Small Business Accounting
    • Complete Packages
    • Small Business Bookkeeping
    • Etax Local Business Tax Checklists
  • Individual Services
    • Individual Tax Returns
    • Tax Return Checklists – free download
    • SMSF Annual Tax Return
    • Rideshare Tax Returns
    • Freelancer Tax, Income and BAS Services
    • SMSF Audits
    • Late Tax Returns
    • Early 2020 Tax Returns
  • Client Portal
  • Blog
  • About
    • Our People
    • Etax Local Website User Terms And Conditions
    • Etax Local Security and Privacy Statement
    • Frequently Asked Questions
  • Contact
  • Membership
    • Members’ Feedback
    • Member Login

Work from home this year? How to claim expenses the right way

Due to the mass exodus from commercial office to home office last year, the ATO brought in a new, simpler method to claim work from home expenses. As the trend for working from home, either part or full time continues, the new method was extended for another year.

They called it the ‘Shortcut’ method but the important question is:

How does the Shortcut Method differ from the existing ‘Cents Per Hour’ method of claiming work from home running expenses, and are you better off using this new method or sticking with the old one?

(There is an ‘actual expenses’ method for claiming work at home tax deductions but that can get pretty complicated, so for the purposes of this article, we’ll just explore the two methods most people are likely to use.)

The standard fixed rate method works like this: You claim 52c for each hour that you work from home. This covers running expenses of your home office area. You can also claim a percentage of your internet expenses and mobile phone expenses, if you need to use your personal phone for work related tasks.

The new shortcut method means you simply claim 80c per hour for every hour that you work from home.

Valid through:

  • March 1 to June 30, 2020, for 2019-20 tax returns
  • July 1 2020 to June 30, 2021, for 2020-21 tax returns 
  • July 1 2021 to June 2022, for 2021-22 tax returns

But is the shortcut method better for you or the ATO?

The increased hourly rate of the shortcut method looks great on the surface but it might not be the best option for your circumstances. To find out which one is best for you, you need to start with a few sums!

This is easier to explain if we look at a couple of examples:

Example 1:

Emma is a graphic designer who worked at home for 15 hours a week between July 1 2020 and June 30, 2021. She took four weeks leave over the year. She recorded her phone and internet usage for one month and worked out that 50% of her mobile phone use is work related and internet is 60%.

Fixed rate method:

  • 15 hours per week x 52c x 48 weeks between July 1 2020 and June 30, 2021 = $374.40
  • Emma could claim 50% of her $99 monthly phone bill x 11 months = $544.50
  • Emma could claim 60% of her S80 monthly internet bill x 11 months = $528
  • The total work from home expenses Emma can claim for this period is = $1446.90

Shortcut method:

  • With this method, Emma could claim 15 hours per week x 80c x 48 weeks = $576

But that’s all! Phone and internet expenses are included in the 80c per hour rate of the shortcut method so Emma can’t add these on.

Choosing the standard fixed rate method for running expenses, at 52c an hour. Plus adding on her phone and internet costs separately, Emma could claim $870.90 more than if she used the new shortcut method.

Example 2:

Peter is a consultant who worked full time at home instead of the office, between July 1 and June 30 2021. Peter also took 4 weeks leave through the year. Unlike Emma, his company provide him with a company mobile phone. They don’t pay his internet costs though and he splits those with his house mate. Because he shares the internet, he can only claim 50% of his total internet use for working at home.

Fixed rate method:

Peter can claim 38 hours per week x 52c x 48 weeks = $948.48

His monthly Internet bill is $80 a month, split 50/50 with his housemate. Peter’s share of the bill is S40 and so he could claim 50% of that amount for 11 months = $220

Peter’s total work from home claim = $1168.48

Shortcut method:

Peter can claim 38 hours per week x 80c x 48 weeks = $1459.20

Peter can’t claim his internet with this method as it’s included in the 80c per hour rate.

Peter’s work from home deduction claim would be $290.72 higher by using the new Shortcut method.

So, you see, it really is worth looking at the figures before you decide which method to choose. It may be easier to just opt for the shortcut method to claim your work from home tax deductions but you may find yourself out of pocket by quite a lot of money.


Still not sure which method is best for you?

No problem, just get in touch with Etax Local and one of our friendly team will work it all out for you, then incorporate the maximum allowable claim into your tax return this year.

Call us on 1300 174 689 or register securely below.

Get in touch with Etax Local

Filed Under: Tax Tagged With: shortcut method, work from home

Previous Post: « Can the JobKeeper Payment Scheme Help My Business?
Next Post: Fast tracked tax cuts: How will you benefit in 2020 and beyond? »

Primary Sidebar

Contact Us Today

GET A QUOTE

CLIENT LOGIN

Call: 1300 174 689

  • Company Tax Returns
  • Small Business Accounting
  • Small Business Start Up
  • Small Business Tax Returns
  • BAS Services
  • Trust Tax Returns
  • Partnership Tax Returns
  • Small Business Packages

Prefer to do your individual tax return yourself online?

Go to etax.com.au

Etax.com.au is our sister business, a self serve tax return for individual taxpayers. You enter your own details and deductions. Etax accountants review your return, provide tax agent advice as needed, then lodge to the ATO.

Company Tax Returns

keep your company tax returns up to date with Etax Local

BAS Services

Etax Local BAS Services

Small Business Tax Returns

Small business tax returns

SMSF Audit – keep your future on track

 [box]Getting in touch[/box]

[tabs style=”default”] [tab title=”Phone/Email”] 1300 174 689   |   [email protected][/tab] [tab title=”General Requests”]Service Requests are the primary means of contacting NSO. These should be raised for all requests relating to HR, EPM/login issues, business/cleint queries, fees and marketing approval.[/tab] [tab title=”Job Queries”]Job Notes should be used for or all requests relating to a particular job, including fee queries and advice. Use the job notes tab within each job.[/tab] [tab title=”Human Resources”]For all queries and requests regarding your contract or personal issues matters. please send a private message from your EPM profile messages tab to our Human Resources department. [/tab][/tabs]

[box]FAQs[/box]

[toggle title_open=”Accounting Software Access Instructions” title_closed=”Q: How do clients provide access to their accounting software?” hide=”yes” border=”yes” style=”default” excerpt_length=”0″ read_more_text=”Read More” read_less_text=”Read Less” include_excerpt_html=”no”][typography font=”Metrophobic” size=”14″ size_format=”px”]Help your clients provide access to their accounting software accounts. Download the following step-by-step guides:[/typography]

[ilink url=”https://pm.etax.com.au/StandardDocuments/DownloadDocument/227″ style=”download”]MYOB[/ilink]

[ilink url=”https://pm.etax.com.au/StandardDocuments/DownloadDocument/228″ style=”download”]QuickBooks[/ilink]

[ilink url=”https://pm.etax.com.au/StandardDocuments/DownloadDocument/229″ style=”download”]XERO[/ilink][/toggle]

[toggle title_open=”Close Me” title_closed=”Q: What services can I coordinate through Etax Local?” hide=”yes” border=”yes” style=”default” excerpt_length=”0″ read_more_text=”Read More” read_less_text=”Read Less” include_excerpt_html=”no”]It’s advisable to be across the services provided by Etax Local in order for you to fully utilise your Membership.

[box]Services you can coordinate through us include:[/box]

[unordered_list style=”bullet”]

  • Company tax returns
  • Business Activity Statements (BAS)
  • Partnership tax returns
  • Sole Trader tax returns
  • Previous years or late tax returns
  • Trust advice and trust tax returns
  • Business Start-Up and advice
  • Self-Managed Superfunds (SMSF)
  • Individual tax returns
  • General accounting
  • Bookkeeping

[/unordered_list]

[box]A Helping Hand[/box]

Etax Local can also undertake jobs that you would usually provide, if your circumstances change.

For example: if your workload increases temporarily, you’re planning a holiday or you are unwell.

Whatever the reason; Etax Local can always help by making sure your clients aren’t affected.[/toggle]

[toggle title_open=”Close Me” title_closed=”Q: What services does Etax Local NOT provide Members?” hide=”yes” border=”yes” style=”default” excerpt_length=”0″ read_more_text=”Read More” read_less_text=”Read Less” include_excerpt_html=”no”]There are certain services that Members are not authorised to offer through Etax Local.
[hr]

These include: [unordered_list style=”bullet”]

      • Statements of Position for Banks and other financial institutions.
      • Financial Statements where we are not the appointed Tax Agent.
      • Section 52 Forms (Certification of Business Operating Report by Certified Practicing Accountant).
      • Any form where we are required to certify that a client’s financial statements are accurate.
      • Financial recommendations of any kind.

[/unordered_list]
[hr]
If you are unsure about a request from a client, always contact Etax Local prior to providing an answer.[/toggle]

[toggle title_open=”Close Me” title_closed=”Q: What fees should I charge?” hide=”yes” border=”yes” style=”default” excerpt_length=”0″ read_more_text=”Read More” read_less_text=”Read Less” include_excerpt_html=”no”][box type=”info”]Please read our Etax Local Service Fees Section on this page, prior to setting and receiving client fees for an Etax Local service. [/box]

This area includes

[unordered_list style=”bullet”]

  • a standard fee schedule to assist members to quote for jobs
  • information about fee split percentages
  • and other important information regarding fees

[/unordered_list] [/toggle]

[toggle title_open=”Close Me” title_closed=”Q: Does Etax Local cover my insurance?” hide=”yes” border=”yes” style=”default” excerpt_length=”0″ read_more_text=”Read More” read_less_text=”Read Less” include_excerpt_html=”no”]Etax Local maintains Professional Indemnity Insurance that protects our people from liability related to the work and advice provided to clients. This professional indemnity cover extends to Members who have signed the latest Etax Local contractor agreement and who carry out services in accordance with the contractor agreement.

[box]Please read our Certificate of Currency[/box]

Important: You are responsible for maintaining your own insurance policies to cover public liability, workplace injury, third party motor vehicle and property cover and any other insurance needed to protect you (and the public). Your insurance should cover you personally and as a business entity (if applicable). These requirements are discussed in further detail in item 17 and item 18 of the Etax Local Contractor Agreement.[/toggle]

2017 Webinars

[toggle title_open=”Close Me” title_closed=”Etax Local – Tax updates and productivity tips 2017″ hide=”yes” border=”yes” style=”default” excerpt_length=”0″ read_more_text=”Read More” read_less_text=”Read Less” include_excerpt_html=”no”]

[/toggle]

Footer

About Etax Local

  • Home
  • About Etax Local
  • FAQs
  • Security and Privacy Statement
  • Member Login
  • Tax Return Checklists – free download
  • Personal Australian Tax Rates
  • Find an Etax Local Member

Business Services

  • Company Tax Returns
  • Small Business Accounting
  • Small Business Start Up
  • Small Business Tax Returns
  • BAS Services
  • Trust Tax Returns
  • Partnership Tax Returns
  • Small Business Packages
  • Individual Tax Returns
  • SMSF Tax Returns
  • Late Tax Returns

Accredited Members

Tax Agent
#39961005

Etaxlocal Pty Ltd is a CPA Practice

Quality Assurance

Protected by SSL Security

Partners and Associations

 

 

Copyright © 2022 · EtaxLocal Pty Ltd
Liability limited by a scheme approved under Professional Standards Legislation.