No doubt for the last 2 years you may have spent some time working from home and if you have, you most likely would have claimed working from home (WFH) expenses. 

At the start of the pandemic, the ATO introduced the short cut method for calculating work from home expenses. However, this method will be coming to a close for the 2021-2022 tax year.

In addition, the tax office has been giving plenty of indications that this tax return season, they will have more resources, more time and more interest in ensuring that everyone only claims what they are actually entitled to – especially in the area of work from home expenses. 

So to ensure that you are fully across what you can and can’t claim, and the evidence you need, we thought it timely to put together this short article on the ShortCut Method and what you need to be mindful of. 

The “Shortcut Method” allows people to claim 80 cents per hour, rather than needing to calculate costs for specific running expenses whilst working from home.

This shortcut method, as outlined above is coming to a close this past tax year, so you can only use it to work out your deduction for work from home expenses for the following periods.

• between 1 March 2020 to 30 June 2020 in the 2019–20 income year
• for the 2020–21 and 2021–22 income years.

It is critical that you meet the eligibility and record keeping requirements for the method you choose to use, especially as the ATO will be paying close attention to work from home expenses, in ways that they have not during the pandemic.

You can use this method if you:

• worked from home and incurred some additional running expenses as a result
• have a record of the number of hours you worked from home.

How the Shortcut Method works

The temporary shortcut method simplifies how you calculate your deduction for working from home expenses.

Using this method, you:

• can claim 80 cents per hour for each hour you work from home
• can’t claim any other expenses for working from home, even if you bought new equipment.
• The shortcut method covers all your working from home expenses, such as:
  • phone and data expenses

• internet expenses
• the decline in value of equipment and furniture
• electricity and gas for heating, cooling and lighting.

The shortcut method includes decline in value of all items. If you choose to use this method there is no requirement to separately calculate the decline in value of equipment or depreciating assets or any other working from home expense.

However, as you may need to use a different method to work out your working from home deduction in later years it’s important to keep the:

• receipts for depreciating assets or equipment you use when working from home
• records of how you calculated your work-related use of the asset
• your decline in value calculations

Record keeping for the shortcut method

You must have a record of the hours you worked from home, for example, a timesheet, roster or diary.

As with all things, but especially for this year’s tax return, record keeping is critical.