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The ATO says it will make a decision soon on a possible extension of the home office expenses shortcut method as large swathes of the country remain homebound under public health orders.
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ATO coy on work-from-home deduction shortcut
27 September 2021
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9 minute read
The temporary shortcut method, which expired on 30 June this year, allows taxpayers to claim a fixed rate of 80 cents an hour for all running expenses incurred as a result of working from home, as opposed to calculating costs for specific expenses.
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It was introduced in April 2020 at the start of the pandemic and was extended on three separate occasions as lockdowns became a regular feature of Australia’s response to the health crisis.
The ATO told Accountants Daily that the shortcut method was always intended to be a temporary measure and was originally brought in to help taxpayers “who found themselves unexpectedly working from home for the first time during the pandemic and so would unlikely have been prepared for the normal record keeping requirements”.
However, with rolling lockdowns ongoing in Sydney, Melbourne, and Canberra, the Tax Office said it would now contemplate reintroducing the shortcut method.
“We are mindful that many Australians continue to find themselves working from home,” said an ATO spokesperson.
“As a result, we are assessing the working from home methods for the 2021-22 financial year and expect to be able to provide information about this shortly.”
Chartered Accountants ANZ tax leader Michael Croker has urged the ATO to expedite its review, noting that clarity on the issue would allow tax agents to confidently advise clients at tax time.
“At a time when many tax agents are helping their individual clients to prepare their tax return for 30 June 2021, the 80-cent deduction is often discussed and the obvious question clients ask is whether they can calculate the same deduction for FY 2022,” said Mr Croker.
“Logic would suggest it should continue on the grounds of simplicity. After all, many in NSW and Victoria remain in lockdown and must work from home.”
Accountants also believe the shortcut method should be reinstated in light of ongoing lockdowns, with BDO tax partner Mark Molesworth going one further and urging the ATO to make it a permanent feature of the tax system.
In the meantime, the ATO has reminded taxpayers to continue to keep good records now to be afforded the flexibility of choice between home office expense methods next tax time.
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