The Practical Compliance Guide- Shortcut Method for Home Office Deductions Extended

Woman using a mobile phone while working from home.

PCG 2020/3 has been amended to extend the period that taxpayers can use the ‘shortcut’ 80 cents per hour method for calculating deductions for additional running expenses incurred while an individual is working from home due to COVID-19.

Taxpayers will now be able to use this method in relation to the period from 1 July 2021 to 30 June 2022.

This rate can be claimed for every hour that is worked at home. The hourly rate covers all additional running expenses, namely:

• electricity (lighting, cooling/heating and electronic items used for work, for example a computer) and gas (heating) expenses

• the decline in value and repair of capital items such as home office furniture and furnishings

• cleaning expenses

• phone expenses including the decline in value of a phone handset

• internet expenses

• computer consumables

• stationery, and

• the decline in value of a computer, laptop or similar device.

This Guideline will apply to employees and business owners (taxpayers) who are:

• working from home to fulfil their employment duties or to run their business (working from home) during the relevant income year, and

• incurring additional running expenses that are deductible under section 8-1 and Division 40 of the Income Tax Assessment Act 1997 (incurring additional running expenses) as a result of working from home.

This Guideline does not apply to employees for any period they are on leave or stood down during the period.

This Guideline also does not apply to business owners if they have ceased trading permanently.

During the period from 1 March 2020 to the date this Guideline ceases to apply, any business owner who now carries on their business from their home or continues to carry on their business at home will be covered under this Guideline.

This Guideline is intended to cover all taxpayers working from home during this period, whether as a result of COVID-19 or not.

For the full compliance guide details check it out here.