The shortcut method, implemented in March 2020, has expired on 30 June 2022. As a result of the global pandemic, many office workers were forced to work from home, which changed how the ATO handled tax deductions.
In lieu of calculating costs for specific products, the temporary shortcut technique permits taxpayers to claim a flat rate of $0.80 per hour for all operational expenditures incurred from working from home. The method has been extended several times since its inception, but it is now expired given that the world and workplaces have reopened.
Nonetheless, as we prepare and lodge our income tax returns for the year ended 30 June 2022, this method will still be relevant.
There aren’t many requirements to meet if you’re claiming the shortcut method. The two most notable are:
- As a result of working from home, you incurred some additional operating expenditures.
- You have a log of the number of hours you worked from home
As a reminder, you may only use the method to calculate your deduction for work from home expenses:
- For the 2019-20 financial year, from March 1, 2020, to June 30, 2020
- For the financial years 2020-21 and 2021-22.
How it works
The temporary shortcut method simplifies the calculation of your deduction for working from home expenditures. Using this strategy, it is possible to:
- Claim $0.80 per hour for hours worked from home
- But you cannot deduct any additional expenditures for working from home, even if you purchased new equipment (such as headphones, keyboards etc).
The shortcut method covers all your work-from-home expenditures, including phone and data expenditures, internet expenses, equipment and furniture depreciation, and energy and gas for heating, cooling, and lighting.
As the shortcut method have ended, you may need to use a different method to calculate your working from home deduction in the future; it’s critical to file receipts for depreciating assets or equipment used when working from home and documentation of how you estimated your work-related usage.
Because the ATO requires proof of hours worked, it does not have to be very sophisticated as long as you have a record of hours spent from home. For example, they might take the shape of a timesheet roster, diary or a logbook – as long as there is a copy of the hours worked from home to present when and if called upon.
It is important to note that you must prove that your employer required you to undertake work activities at home.
With the dawn of a new financial year, and old techniques are reintroduced, it is critical to get your taxes in order and select which method best matches your needs.
If you have any queries regarding the above information, please do not hesitate to contact a specialist member from our Accru office today.