Question

Based on taxation in Accounting

Amid the COVID-19 fears, Standing Desks, monitors sell for work from home in Australia

It is not a surprise now that almost every shop is running out of standing desks, swivel chairs, office desks, and monitors, as thousands of employees start work from home. Most companies have advised their employees to start work from home and to set up their due office at home. The market is running out of office gears.

Just last week, the World Health Organization announced the Covid-19 to be a pandemic. It resulted in chaos amongst every person who spends most of his hours out of the house. Therefore, to safeguard the situation of their employees, as well as promote social distancing to stop the spread of the virus, companies like Google, Amazon, Twitter, etc. have started requesting its employees to set up their offices at home. O

In an office works store in Melbourne CBD, customers wishing to buy a monitor were told that only one of them was left as the store had run out of every monitor by Monday afternoon itself. The store also said that they are currently not expecting any backorder to arrive before April. The salesperson on talking to a leading news channel said that they saw a spike in the sale of office-related products since the announcement of ‘work from home’ was given.

A spokesperson for the Melbourne CBD office works store said, “While there have been some stock shortages due to excessive demand, we are looking to source alternatives and increase stock levels to meet customer needs. For customers that aren’t able to get in-store and get what they need, we are doing everything we can to fulfill online deliveries”.

As it has become clear that almost every office works store in Australia has run out of standing desk. A customer called Ryan Byrne, who started work from home last week, commented that he was one of the few lucky ones left to get himself a monitor. The size he needed was not available, but he settled for another model with a much smaller size. He also said that it was expected for the store to be busy, but he did not expect it to run out of monitors so soon.

Customers who wanted to buy office chairs and desks at the Kmart and Walmart were also left disappointed. The customers left empty-handed without giving any knowledge on when the stocks will be refilled. Stores like Kmart, Officeworks, and JB HIFI declined to comment on the situation and has not released any official statement that will ease the tension spreading through the masses.

A consulting firm EY is also known as Ernst & Young, asked almost 20,000 of its employees to start work from home amid the coronavirus crisis.

Almost every employee found it a relief to be working from home, as no one wishes to risk the health of themselves as well as their employees in the wake of Coronavirus. At least more than a thousand deaths have been reported from Italy, and the terror amongst the masses is high.

Companies like Google have also announced that they will be covering the expenses involved in setting up the home office for their employees. Not only that, but the company will also be paying the salary for employees who cannot work due to sickness by the COVID-19. It is a good and appreciative step taken by Google, and many other companies like Amazon, Twitter, and Facebook have followed suit.

Whether office related products such as monitor screens, Keyboards, desks, and chairs will be available within this week, is not clear. As no leading store is available to comment on the grave situation. But the people of Australia have already started work from home by using their creativity and imagination. Some employees have even started using their kitchen counter as a standing desk, and dining chairs or bar tools to sit and work

Q: You will need to consider what this article is concerned about and what the relevance to the tax system is. For example, is the topic of some event that has occurred to a particular taxpayer(s), or perhaps there is a particular kind of activity that needs consideration? Determine what the relevant tax issues might be.

Answer 1

1.

More and more employees prefer to work from home during this covid-19 pandemic period. As a result, we see a rise in demand for various utensils and equipment. Employees will incur various expenses in order to modify their home into a workplace. This has seen a rise in demand and a decline in supplies. Moreover, many companies are offering to cover the expenses involved in setting up offices at the homes of the employees. This could mean that what used to be tax deductible may no longer be tax deductible and vice versa.

Salary components like conveyance allowance will no longer be tax-free. Other benefits such as LTA (Leave, travel and allowance), which forms a part of employee’s total CTC (cost-to-company), will become less important due to the inability to travel places for holidays and such during the covid-19 pandemic period. This means that taxes of the salaried professionals will go up. Also, if the conveyances are offered as reimbursement, the employee will have to provide the proof of the actual expenses incurred. Australians working from home will not have to pay capital gains tax.

In order to work from home the money should be spent, expenses relating to the earning of the income and a record of proof should be present. Any money reimbursed by the employer will not be allowed for deduction. Also, if someone moves in with their family and vacates their apartment or rented house, house rent allowance can no longer be claimed. Electricity costs associated with work, computer consumables, telephone expenses, internet expenses, and home office equipment expenses can all be claimed as additional expenses. Cost of grocery household items, items reimbursed for, costs related to education of children and time not spent cannot be claimed.

In the case of employers, there is no need to pay fringe benefits tax (FBT) for reimbursing an employee for their work from home related expenses and for ‘equipping an employee’ to have them work from their residences (which should be documented). Exemption from FBT also applies to any tools of trade, laptops, mobile phones, protective clothing, medical examinations, preventive healthcare, counselling, in-house healthcare and taxi expenses. Other expenses for which the exemption applies are minor, infrequent and irregular benefits lower than $300 and to some benefits provided to healthcare workers. The employer’s expense incurred related to working from home is tax deductible as an expense of employing labour and that which is necessary to carry on the trade/business.