Working from home has become a reality for so many of us this year, and from a tax perspective working out what you can claim can be a little daunting. We included the following question in our August 'Your Knowledge' newsletter that explains why certain things are deductible and others are not.
If you are currently preparing to complete your tax return it is definitely worth a read.
During lock down I have had to work from home. I’ve set up a full home office with paintings, plants, a desk, computer equipment, a water tower and a sculpture. I presume I can claim everything I have purchased for this office and claim part of my mortgage and running costs?
In general, home office expenses are designed for those who run their business out of home. If you are merely working from home and not running a business at home, then it’s unlikely you will be able to claim occupancy expenses such as mortgage interest or rent. Keep in mind that if you claim occupancy costs, this will impact on your access to the CGT main residence exemption.
The water cooler is unlikely to be deductible as food and drink is considered to be private in nature. The items that beautify your office will generally only be deductible if they are displayed in open viewing areas in premises used for income producing purposes including reception areas, waiting rooms and foyers.
If you are working from home and have set up a home office for this purpose, you can claim a deduction for your expenses based on the 80 cents per hour short cut method, the 52 cents per hour method (which excludes phone, internet, or the decline in value of equipment which are all claimed separately), or the actual method.
We have updated our Tax Return Preparation Checklist for 2020 and you can access it here. For more information on how we can prepare your tax returns while in lockdown you can head to our 'Preparing your Tax Return' page.