Claiming tax when working from home
The ATO is seeking to increase their attention on home office expenses due to the high level of questionable claims made by taxpayers. There has been an increase in the number of Australians claiming deductions for costs incurred from working from home.
The ATO reports that in the last tax year 6.7 million taxpayers claimed a record $7.9 billion in deductions for ‘other work-related expenses’, including expenses relating to working from home.
The main mistakes stem from individuals claiming the whole instead of the work-related portion of expenses for bills related to phone, internet, printing and stationery.
The ATO has identified that a separate work area will incur work-related expenses eligible for tax deductions as opposed to answering some emails at a kitchen bench. The ATO has also recommended recording expenses in case of an audit or if the ATO contacts your employer to confirm your claim.
To ensure you do not suffer non-compliance penalties, the ATO recommends you follow the three golden rules for taxpayers working from home. One- you must have spent the money yourself and not been reimbursed, two- the claim must be directly related to earning your income, and three- you need a record to prove it.