The practical compliance guideline that was issued relatively recently, PCG 2020/3, covers working from home and incurring additional running expenses in relation to their income-producing activities during the COVID-19 pandemic.
As the COVID-19 pandemic continues to affect the community and there will be an impact on some taxpayers’ working arrangements after 30 June 2020, the ATO has now announced that the date of effect of this guideline has been extended.
The PCG now applies from 1 March 2020 to 30 September 2020 and allows taxpayers still working from home to continue using the simplified method referred to as the “shortcut method” to claim their additional running expenses.
The ATO states that there is also the option to extend the PCG application further, depending on circumstances.
Additional running expenses include lighting, heating, cooling and cleaning costs, electricity for electronic items used for work, the decline in value and repair of home office items such as furniture and furnishings in the area used for work, phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device.
Clients should still be reminded that occupancy expenses relating to a home such as rent, mortgage interest, property insurance and land taxes will not become deductible only because they are required to work from home temporarily as a consequence of COVID-19.
Clients who wish to rely on the shortcut rate to calculate their additional running expenses will need to keep a record of the hours they have worked at home. This could be in the form of timesheets, rosters, a diary or similar document that sets out the dates and hours worked. As with claims for the 2019-20 income year, a notation stating “COVID-hourly rate” will need to be placed next to their deduction for home office expenses in the eventual 2020-21 return.