KEEPING UP TO DATE

Employee support – information to help your employees with their tax

For many of us working from home has continued to be a significant part of work life during financial year 2021-2022. Many employees don’t know they can claim a deduction for working from home expenses. Helping employees make the most of their tax return is a great way to set yourself apart as an employer who cares.

There are three ways to calculate a claim. Employees should choose the one that helps them achieve the best return:

• The shortcut method enables individuals to claim 80 cents per hour. It wraps everything up into one fixed rate and is available until the end of this tax year. The ATO is not continuing it in 2022-23 Financial Year.

The following two methods are slated to remain options for employees in the coming years.

• The actual cost method allows individuals to calculate their working from home expenses. Employees claim actual costs they’ve incurred during the course of the year. For many this provides the largest return, but it also has the most stringent documentation requirements. Employees must keep and provide individual receipts of all expenses for at least seven years (if audited). Employees may also be required to have kept a diary to accurately apportion expenses between personal and work use.
• The fixed-rate method allows employees to claim working from home expenses at 52 cents per hour. The ATO suggests this method covers the majority of expenses for the average employee, but not everything (depending on their personal situation).

In addition to these hourly rate deductions employees can also claim home internet, home phone, or the depreciation of computer equipment etc. Covid related costs including tests, masks and hand sanitiser etc can also be claimed if purchased by the employee and not reimbursed by your business. With these additional claims employees usually end up making a bigger claim compared to the 80 cent rate.

Again, receipts for the deduction of expenses must be kept for for 7 years or provided if audited.

Employees should always seek personal advice from a tax agent as employer’s do not know all of their personal circumstances.