This year, tax time is looking more complicated than ever before. We get it — there are a whole range of new schemes and government offers that need to be taken into consideration.
Due to COVID-19, one of the biggest questions that we’ve been seeing surrounding tax time is, “what exactly can I claim since working from home?”
So many Australians were forced to break their normal work routine and pick it back up in a home setting. While that is complicated enough in itself, I’m sure most of us realised that it came with some extra expenses along the way — one of the biggest ones being a spike in energy usage.
As we stay home to protect ourselves and the community against COVID-19, it is estimated that electricity charges could increase by up to 50 percent — causing all of our electricity bills to have a ginormous blowout.
According to the Australian Tax Office, all people working from home are able to claim electricity expenses associated with heating, cooling, and lighting the area from which you are working and running items you use for work (for example, your computer or phone charger).
We’re here to break down this process a little, and make sure you’re able to claim what is fairly owed to you.
So, let’s get started!
There are three different ways to go about claiming your energy usage — some are more complicated than others, but have the potential to offer a higher return, so it’s worth looking into all three.
Before you do anything though, start by working out exactly how many hours you worked from home between March 1 2020 and June 30 2020. To do this, establish your work days (be careful to remove any public holidays) and then multiply it by the hours you worked each day.
Hold onto these figures with a record of your working hours, like a pay slip or work roster, as you’ll need them later.
The Three Methods…
1. Shortcut Method
Due to these unprecedented times, the Federal Government is offering an increased 80 cents per hour that has been worked from home. This figure is designed to cover additional expenses such as your mobile phone bills, home internet bills, and any additional electricity and gas that has been used.
The simple way to complete the Shortcut Method is to take the hours that you’ve worked from home (that you calculated earlier) and multiply it by .80 — and that’s how much your claim as your Other Work-Related Expenses due to COVID-19.
Who can claim the Shortcut Method?
To claim this figure, you don’t need to have a specific home office or study, but you do need to be fulfilling all of your current job requirements from home — that means that you’re doing your entire job from home, not just checking emails or making a couple of phone calls here and there.
2. Actual Cost Method
This method is much more complicated and delves deeper into your working from home expenses, but also provides a more accurate figure to work with.
To complete the Actual Cost Method, you need to break down the energy sources that you’ve been using more of during your working from home period. For example, work out how many kilowatts per hour your lighting, equipment, technology, heating and cooling uses, and then multiply each by the number of hours you’re using them during your working hours at home.
Once you’ve got a total kilowatts figure, find your energy rate on your latest power bill and multiply it by the total number of additional kilowatts you are using over the working from home period.
Who can claim the Actual Cost Method?
For the people that have introduced large quantities of IT equipment or machinery into their home to continue working through COVID-19, this is especially relevant to you. It is also perfect for people that keep meticulous records of expenses already, to cut out some of the margin for error.
3. Fixed Cost Method
The Fixed Cost Method includes a 52 cent per hour worked flat rate all year round, and is designed to cover your additional energy expenses as well as the general wear and tear of your office furniture and equipment. On top of that 52 cent flat rate, you are also eligible to claim your phone and internet expenses and any necessary stationary.
Who can claim the Fixed Cost Method?
This method is relevant to the people that work from home all year round anyway with a permanent home office, as it can be applied to the entire year (except from March 1 2020 to June 30 2020, when the inflated rate of 80 cents comes into play). It also could result in a higher return, as you’re claiming phone and internet expenses on top of the 52 cent flat rate per hour.
So, How Do You Actually Make Your Additional Energy Expense Claim?
- Keep a log of your total hours worked from home. If needed, request your employee to provide a written count for you.
- Find your latest energy bill, and identify the power usage rate. You’ll need this figure when working out your claim amount, but also as proof to be submitted with your tax claim.
- Choose a method from the options above, and establish your working from home usage amount. It can be a good idea to trial a couple of different methods to see which provides you with the greatest claim.
- Lodge your claim as normal with the Australian Tax Office. This can be done through the ATO website or MyGov website.
How Can We Help At Esena Energy?
As we look toward the future, it’s important to consider how this new way of working (or the ramifications of working from home) will impact your energy usage for the years to come. COVID-19 was unexpected for all of us, and while it’s caused huge levels of damage and stress for Australians, it has also provided a huge opportunity to learn from our current structures and find ways to improve them moving forward.
Our team at Esena specialises in energy management solutions — such as through the installation of solar panels or LED lighting — and are here to help you save on your energy bills in any way we can. Year after year, we help thousands of households slash their energy bills. Speak to one of our expert energy consultants today to see how we can help you too.
A Few Hot Tips, From Us To You…
It’s been a rough year already — the LAST thing you want is to be caught out submitting an incorrect tax claim! Here are three tips from us to ensure your tax claim is perfect:
- If you share a house with someone who has also been working from home throughout COVID-19, make sure to split some of the additional usage by half. For example, if you’re both working from home and using the same heating system, you can both only claim half each.
- Make sure your claim amount matches up with your energy bill, as you’ll be required to show that as proof. Don’t try to over claim!
- When calculating your total hours worked from home, make sure to take public holidays, weekends, and your standard lunch breaks into consideration.
- If your entire business is actually run from home, you may be able to claim some of your rent and mortgage payments as well — the guidelines for this are slightly different.
And as always, if you have any questions about your energy usage needs, please don’t hesitate to contact our friendly team at Esena Energy.