How to maximise your tax deductions in 2021 if you are still working at home in Australia


Australians working from home can effectively double their tax refund by keeping their receipts and being prepared to do more paperwork.

Since March last year, the federal government has allowed professionals to claim a flat 80 cents-an-hour rate.

The new rule, brought in to cater for those worked to work from home during the early days of the Covid pandemic, was designed to save time but it’s also a surefire way to miss out on generous tax deductions.

Tax agent H&R Block calculated someone claiming the flat 80 cents-an-hour rate from July 1 last year until June 30, 2021 would typically have claimed $1,200 to $1,350 in deductions.

Australians working from home can effectively double their tax refund by keeping their receipts and being prepared to do more paperwork. Since March last year, the federal government has allowed professionals to claim a flat 80 cents-an-hour rate. Stock image

Australians working from home can effectively double their tax refund by keeping their receipts and being prepared to do more paperwork. Since March last year, the federal government has allowed professionals to claim a flat 80 cents-an-hour rate. Stock image

Typical working from home expenses

Working from home hours multiplied by 52 cents: $998 

Office desk: $270

Office chair: $149

Filing cabinet: $225 

Home gas heating: $1,080

Electricity: $3,600 

Home phone, internet: $600

Mobile phone: $780 

Stationary: $240 

Cleaning products: $320

Source: H&R Block. 

Note items like gas heating and electricity can only be claimed for the proportion of the home used as an office while phone, internet usage has to be itemised for work-related communication

The Australian Taxation Office is allowing people working from home to claim the flat 80-cent rate until the end of this financial year. 

But by opting for the lower 52 cents-an-hour rate and individually adding up their home phone, internet and electricity bills, someone working from home stood to be able to claim between $2,550 and $2,700.

H&R Block’s director of tax communications Mark Chapman said those working from home would typically lose out on more than $1,000 worth of tax deductions if they opted for the government’s flat 80 cent rate.

‘The 80 cent rate is sold by the ATO as the simple, easy to calculate alternative and so it is – but the hidden catch comes with the size of deduction you can claim,’ he told Daily Mail Australia.

‘The other flat rate method – the 52-cent- per-hour method – actually produces for many taxpayers a bigger deduction, to the tune of at least $1,000.’

Instead of opting for the flat 80 cent rate, Mr Chapman said a full-time white collar professional like a solicitor, who turned a spare bedroom into an office, could instead claim 52 cents an hour for the 1,920 hours worked from home during the past year.

Added together, that would add up to $998.40.

In addition to that, professionals could claim the cost of home and mobile phone and internet bills but not the depreciation of a laptop computer, which an employer had provided.

Nor could they claim the cost of tea, coffee or toilet paper, even though these items are provided in a workplace, because the tax office considers them to be domestic in nature.  

H&R Block calculated a solicitor or an accountant could typically claim $2,618, based on 52 cents for every hour worked at home, plus $600 for home phone and internet, $780 for mobile phone calls and $240 for stationary. Stock image

H&R Block calculated a solicitor or an accountant could typically claim $2,618, based on 52 cents for every hour worked at home, plus $600 for home phone and internet, $780 for mobile phone calls and $240 for stationary. Stock image

H&R Block calculated a solicitor or an accountant could typically claim $2,618, based on 52 cents for every hour worked at home, plus $600 for home phone and internet, $780 for mobile phone calls and $240 for stationary. 

The tax refund grew to $3,118 if this professional claimed 10 per cent of household heating, electricity and cleaning bills, based on the workspace making up 10 per cent of a house.

That rule would enable someone to claim 10 per cent of the cost of $1,080 home gas heating, 10 per cent of $320 cleaning product costs and 10 per cent of the $3,600 electricity bill.

Tax agent H&R Block calculated someone claiming the flat 80 cents-an-hour rate from July 1 last year until June 30, 2021 would typically have claimed $1,200 to $1,350 in deductions. Stock image

Tax agent H&R Block calculated someone claiming the flat 80 cents-an-hour rate from July 1 last year until June 30, 2021 would typically have claimed $1,200 to $1,350 in deductions. Stock image

Those working from home are also required to itemise out phone and internet bills between work-related and personal communication. 

By comparison, the same solicitor working from home who went with the flat 80 cents-an-hour rate would get just $1,536.

Someone working from home could also claim up to $300 for new items like an office chair or a desk.

Together, these could add up to $1,600.

Mr Chapman said that while there was no threshold for claiming office furniture, if the cost exceeded $300 for every item, the expense would to be written off over several years rather than upfront.

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