ATO warns it will be closely noting work-related expenses amid spike in people working from home

With the end of the financial year on the horizon and Australians now thinking about their tax returns, the tax office has warned it will be taking particular note of work-related expenses.

Around 8.5 million people claimed nearly $19.4 billion in work-related expenses in their 2020 tax returns – and that number is expected to spike this year.

Australian Taxation Office assistant commissioner Tim Loh says the COVID-19 pandemic has changed people’s work habits, so he expects their work-related expenses will reflect this.

“We know many people started working from home during COVID-19, so a jump in these claims is expected,” Loh said.

“But, if you are working at home, we would not expect to see claims for travelling between worksites, laundering uniforms or business trips.”

The ATO’s data analytics will be on the lookout for unusually high claims, particularly where someone’s deductions are much higher than others with a similar job and income.

“We will also look closely at anyone with significant working from home expenses, that maintains or increases their claims for things like car, travel or clothing expenses,” Loh said.

“You can’t simply copy and paste the previous year’s claims without evidence.”

A “temporary shortcut method” for working from home expenses is available for the full 2020/21 financial year.

This allows an all-inclusive rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.

“All you need to do is multiply the hours worked at home by 80 cents, keeping a record such as a timesheet, roster or diary entry that shows the hours you worked,” the ATO says.

However, this is only a temporary measure, and for those wanting to claim part of an expense over $300 – such as a desk or computer – in future years, they will need to keep a copy of their receipt.