The tax mistake that could cost you hundreds of dollars
Technology is making it easier to work from home, but many Australians are facing a huge cut to the amount of home office deductions they think they can claim in their tax returns.
The Australian Tax Office warned it was cracking down on home office expenses this year, including phone and internet costs.
The ATO is insisting on supporting documentation for a home office expense claim such as receipts, diary entries and itemised bills.
Without the documentation hundreds of dollars of expense claims may be denied.
Phone and internet claims without receipts are limited to a $50 claim per year, but taxpayers still need documentation to prove it was a work expense.
Taxpayers can legitimately claim additional costs incurred as a direct result of working from home, but need to be careful not to claim private expenses as well, the ATO warned.
“Claims for the work-related portion of expenses like phone, internet, depreciation of your computer, printing and stationery are all allowed,” Assistant Commissioner Kath Anderson said.
“But one of the biggest issues we are seeing is people claiming the entire amount of expenses like their internet or mobile phone, not just the extra bit related to work. In reality, the rest of us are subsidising their private phone calls and internet usage, which is not okay.”
Additional costs of running expenses like electricity for heating, cooling and lighting may be deductible, but taxpayers need to demonstrate they were additional costs, for example used in a designated home office.
“If working from home means sitting in front of the TV or at the kitchen bench doing some emails, it’s unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space,” Ms Anderson said.
Australian workers are also warned the ATO might even contact their employer to verify the claim.
The tax department has discovered some employers already paid the costs claimed, either upfront or through reimbursement, while other times the ATO found there was no need for the employee to work from home at all, it revealed.
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The ATO has a handy home office expenses calculator on its website to help taxpayers calculate their claim, as well as a guide to working from home.
