Part of the: Home Office Furniture Collection
Did you create a home office so that you could stay employed or work on a new idea during the past tax year? If so, the furniture and equipment you bought to facilitate those activities are typically claimable on the income tax return.
For items up to $300, the process is simple and straightforward. You can claim the entire cost of that specific item.
When the furniture or office equipment you bought is higher than $300, you must claim a deduction for depreciation, or the decline in value of the item. Common items are included in the fixed rate 52c per hour method, which means separate depreciation isn’t necessary.
What If I Spent More Than $300 on My Home Office?
When you start a home office, the total cost spent on furniture and equipment is not the figure to use on your income tax return.
Each item purchased has value. You would consider each one separately when filing the return and whether it reaches the $300 standard or not.
Here is an itemised example of an individual who purchased $1,250 in home office furniture and equipment.
Monitor Stand: $175
Under the current standard, each item is considered. Even though the individual spent $1,250, the things that require the depreciation deduction claim are the desk and the laptop because they are above the $300 threshold.
What Is the Shortcut Method?
The ATO announced that it would use a “shortcut method” for depreciation deductions for items greater than $300. It was initially applicable for home office expenses incurred between 1 March and 30 June 2020 for the 2019-20 tax year.
It has been applied to the 2020-21 and the 2021-22 income years. It’s calculated like the 52c per hour method, but it includes all your home office expenses.
The shortcut method is set to expire on 30 June 2022. After that time, you’ll need to return to the fixed-rate way – or use actual cost.
The ATO offers a helpful tool to help you manage your depreciation claims, including when you’re claiming an immediate deduction.
Don’t forget to keep records of your home office expense claims! This information includes how much you use the furniture and equipment over a sample four-week period. You can also use it for itemised phone accounts, small expenses up to $200, and receipts for depreciating assets.