Question

Explain the tax implications of working from home in Australia during the COVID-19 pandemic. Who is likely to be affected by these changes and how?

Answer 1

As the coronavirus pandemic grinds the country to a halt, more Australians are adjusting to working from home as offices around the nation have been forced to close to stop the spread of the virus.

Tax implication of working feom home during covid -19 are

According to the Australian Taxation Office (ATO), if you work from home then you can claim the work-related proportions of household costs such as:

• Heating, cooling and lighting bills
• Costs of cleaning your home working area
• Depreciation of home office furniture and fittings
• Depreciation of office equipment and computers
• Costs of repairing home office equipment, furniture and furnishings
• Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)
• Computer consumables (like printer ink) and stationery
• Phone (mobile and/or landline) and internet expenses

If you had to buy a computer so you could do your work from home, the ATO says you can claim the full cost of items up to $300. If your computer cost more than that, you can deduct the decline in value of your new computer by using the ATO's depreciation tool.

H&R Block Director of Tax Communications Mark Chapmann said those working from home need to identify a 'working area' in their home.

"Ideally, you should have a specific room set aside as a home office," he said.

"If you are using a room with a dual purpose (e.g. dining room), or a room shared with others (e.g. lounge room) you can only claim the expenses for the hours you had exclusive use of the area."

People affected by these changes are -:

Residents Temporarily Overseas

There should not be any change to Australian tax obligations for both employers and employees.

Individuals who are in Australia temporarily due to COVID-19 will not become Australian tax residents provided that they:

• usually live overseas permanently; and
• intend to return there as soon as they are able to.

The tax residency issue may be more complicated if:

• the individual ends up staying in Australia for a lengthy period; and/or
• the individual does not plan to return to his country of residency when he is able to do so.

Lengthy stays in Australia may result in a change to residency. However, this should not be an immediate concern for people who are in Australia temporarily.