ATO announces tax shortcut to support those delivering ECEC remotely

The Australian Taxation Office (ATO) has announced special arrangements for this financial year due to the surge in Australian’s working from home during the COVID-19 pandemic.

While a number of those employed in the early childhood education and care (ECEC) sector are working directly with children, in some instances and roles, professionals are able to undertake distance learning options, such as using video conferencing and pre-recorded content to engage and interact with children and families who are choosing to isolate at this time. 

The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses. Multiple people who are residing at the same address can claim the new rate – for example, a couple who are living together could each individually claim the 80 cents per hour rate. The requirement to have a dedicated work from home area has also been removed.

ATO Assistant Commissioner Karen Foat said the new ‘shortcut’ method will make it easier for those who are working from home for the first time.

“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” Ms Foat explained, adding that the calculation of 80 cents per hour recognises that many taxpayers are working from home for the first time and makes claiming a deduction easier.

“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim,” she added. 

This new shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.

Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.

The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses. 

Working from home claims for 1 March to 30 June

There are three ways that you can choose to calculate your additional running expenses for the 1 March – 30 June period, the ATO advised:

• claim a rate of 80 cents per work hour for all additional running expenses;

• claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device;

• claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

While announcing the change, the ATO reminded tax payers that “the three golden rules for deductions” still apply:  

• Taxpayers must have spent the money themselves and not have been reimbursed, 
• the claim must be directly related to earning income, and;
• there must be a record to substantiate the claim.

For those who were working from home prior to 1 March 2020, the existing approaches should be used to calculate deductions, which are subject to the existing requirements.