Individual Tax Deductions - Tax Concessions to Support Your Personal Cash-Flow

For Individual taxpayers, July presents an ideal time to get ahead in lodging your Income Tax Return for the pervious Financial Year. In claiming all appropriate deductions, you can potentially lower your tax obligations.

Due to the ongoing COVID-19 pandemic, the way we work has been changed indefinitely, with the ability to work-from-home becoming a stable of the business environment in which we now operate in. Knowing what deductions can be claimed as part of working from home can provide an avenue for a greater refund or reduced tax liability.

We highlight tax concessions for individuals, and provide clarity on what work-from-home tax deductions can be claimed below:

What You May be Able to Claim

When working-from-home, there are a number of tax deductions/concessions you are entitled to claim. These deductions can include the following:

  • Work-related IT equipment & office furniture – such as a computer, laptop, mobile phone (purchased up to the value of $300)
  • Work-related IT equipment & office furniture (costing over $300) – depreciation can be claimed on these items
  • Home Phone & Internet costs
  • Mobile Phone costs
  • Utilities – such as electricity for heating, cooling, and lighting your home office
  • Consumables & Stationery – such as paper, stationery, computer consumables (printer paper & ink)
  • Cost of repairs to Office Equipment

It is important to note that “workplace amenities” such as milk, tea, and coffee (which can typically be supplied by employers at work) cannot be claimed as a tax deduction while working from home.

Tax Concession Rules

To claim a deduction for working from home, there are three eligible criteria you must satisfy:

  • You must have spent the money and not been reimbursed by your employer
  • The expense must be directly related to earning your income
  • You must have a record to prove it

It is important to note that individuals should have a dedicated 'home office' study or existing workstation. Where a multi-purpose room (such as a dining or lounge room) is utilised, you can only claim the expenses for the hours the area was used exclusively as your work-office.

Calculation Methods

In claiming deductions for the 2021-22 Financial Year, you will need to use one of the methods set out below to calculate your deduction.

Shortcut Method

  • First introduced in response to increased work-from-home arrangements during the pandemic, you will be able to claim a rate of 80 cents per work hour covering all work-from-home expenditure. You will not be able to claim for any other expenses for working from home. This method is only available up to 30 June 2022.

Fixed-Rate Method

  • A rate of 52 cents per work hour for heating, cooling, lighting, cleaning, and the cost of or decline in value of office furniture costing more than $300
  • The work-related portion of your actual costs of phone & internet expenses, computer consumables, stationery plus other expenses not covered by the fixed rate
  • The work-related portion of the decline in value of a computer, laptop, or similar device

Actual Cost Method

  • Claim the actual work-related portion of all your running expenses

You can use the method that suits your circumstances and yields the highest tax deduction.

It is important to note that as the shortcut method is no longer available from 1 July 2022, you will need to use a different method in future tax years, therefore, it’s important to keep receipts for depreciating assets or equipment you use when working from home.

Claiming COVID-19 Tests & Protective Equipment

From 1 July 2021, those who have paid for a COVID-19 test for work-related purposes are eligible to claim these as a deduction. In doing so, you will need to prove you have purchased the tests yourself and have not been reimbursed by your employer.

Please note you can only claim for tests which were required by your employer to determine if you can attend or remain at work. Where you have purchased a multipack of tests and some of these tests were used for private purposes, you can only claim the work-related portion of the cost.

Similarly, those whose employment requires them to work in close proximity of customers and at risk of contracting COVID-19, may be able to claim a deduction for the purchase of ‘personal protective equipment’ (PPE) items such as gloves, face masks, or hand-sanitiser.

This will most commonly be associated with industries including Medical, Retail, Cleaning, Airline, Beauty and Hospitality.

For More Information

For more information on the personal tax concessions available to you, please contact the Archer Gowland Redshaw team on (07) 3002 2699 | info@agredshaw.com.au.

Aisha Thomas

Written by Aisha Thomas

Aisha is a fully-qualified Business Services Manager, with over 12 years’ experience working within the Accounting industry. In her role with Archer Gowland Redshaw, Aisha specialises in providing tailored accounting, taxation, and strategic business advice to SMEs and high-net wealth individuals – helping clients to achieve their best financial and business outcomes.