How to claim your working from home expenses

Tax time will look a bit different for small businesses this year, but there are some important tips to remember as we approach the end of the financial year.

Of particular importance this year for employees, will be making sure you have your working from home expenses right, with this the single biggest change for most businesses in the past 12 months. There are a couple of ways of looking at this, and which way you decide go could make a big difference to your tax return.

The ‘short cut method’ is to claim 80c an hour for the hours you have worked from home, to cover costs like electricity and internet.

This approach could see employees claim around $700 from the pandemic period, but it could also actually mean you end up paying more tax, so it is worth putting in the extra effort to get this part of your tax claim right.

What I would be doing right now if you work in a small business, would be going to your employer with a logbook of the expenses incurred during your time working from home, and being reimbursed by the business.

That would come back to employees as income from your employer, and the business is then able to claim that expense as a tax deduction. It’s something that is worth discussing with your employer (or your staff), because it can work out beneficially for both parties. The extra effort is generally worth it.

Another important thing for sole traders that are claiming the JobKeeper payment is that even if you are not paying yourself a wage, that payment counts as income, which means it must be included at tax time.

On the subject of JobKeeper, I was contacted by a number of businesses last week who had received their first payment for April, but had yet to receive one for May, and there was confusion about how the system works.

It may not have been clearly communicated, but employers who have been approved for JobKeeper must make a claim for the funds each month. So, while you only have to get approved once, each month you have to go to your single touch payroll and lodge a claim for JobKeeper to ensure you receive your funds from the ATO.

It doesn’t happen automatically, as many assumed, but it will be running through until September, as advertised. Simply go to the system to apply for the May payment and it will be processed the same as the first payment.

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