FBT: Working From Home and Office Expenses

Paul talks about working from home deductions, the impact on the main residence CGT exemption, and home office expenses and FBT.

Date published: 21 April 2022

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TRANSCRIPT

Home Office Expense 

The cool thing with a home office set up is we're so used to now having desks that move up and down like my desk does now. I pressed a button electronic rather than spring loaded. It's wonderful. And sometimes I'll sit on my swiss ball rather than stand or use, use a chair and one of the specially trained EAs (executive assistant) might come around and make sure the height just right and the screen height is right in my arm and shoulder positions the right to use, use the keyboard. So the ergonomics are all set. It's a fringe benefit. 

And what takes this out of FBT as if the set up is done by a suitably qualified professional practitioner. Usually a medical practitioner. So if it's done by an EA who works for Hockridge advisory, the value of the benefit is subject to FBT, whereas if it's done by an external practitioner, no FBT. Little bit crazy, yeah. Just want to just want to watch out for. Now, could you argue that it's a minor and infrequent benefit? And the answer is, yeah, you probably could because unless I'm I have an incredibly short attention span, I probably don't need my desk set up on to regular basis every now and then. I'm not saying, hey, can you just remind me something? So we might go on to minor and infrequent rather than under one of the many heads of what I'd call work related benefits, because there's lots of heads of different sorts of work related and they cover things like occupational health and testing and, and those sort of things.

So maybe we're in because the assistance is provided by someone other than a practitioner that maybe what takes us out is minor and infrequent. 

Working From Home Expenses

And so the issue really with working from home is don't pull out the ATO fact sheet and jump to what's the highest rate if you like per day or per hour for (shortcut method) working from home.

Because that's easy, but that quick kneejerk reaction might disadvantage you or your clients. Have a look at the other (fixed rate method) one. When I say the other one, what I mean by that is it might be that the lower cent rate plus certain actual costs gives you a greater total claim than the higher percents. 

So to give you a sense, when I first started working from home, being an old fashioned sort of guy, I print lots of stuff, I keep hard copies on files and I have soft copies and I get out the highlighter pen and post-it notes because I like doing the page turns the old fashioned way as well as using the computer. For me, it's a case of using bugs rather than using either. I spent in the first several months of lockdown about nine hundred dollars in ink cartridge costs, and that was ninety nine percent work related.

So given that under one of the options that the commission has given us I can use cents for heating, lighting and power and then some actual costs. That's a better deal than the higher cents per hour costs, so that just a watch out, please do do the sums, so you don't doubt yourself. 

Main Residence Exemption 

If you're claiming cents per hour of use, your CGT main residence exemption isn't going to be jeopardized. If you decide you want to start claiming things like mortgage interest or paying rent to your spouse for the use of a study, in those sort of situations, you might just find that the main residence exemption is jeopardized.

So if you're looking for a simple life, the commissioner's approach of cents per hour using a local option A or your option B is the simpler way forward.  

And, and the law is really interesting the way that's developed because we'd have to ask questions like, are we working at home as a matter of choice? No, this is compulsory, but does it make it a primary place of employment? And we say, well, yeah, actually it is during lockdown because there is no other place of employment.

This isn't a matter of choice anymore. Then what about the crossover days when we for a very substantial period during lockdown we could have worked at work in the office if we wanted to, but we chose to work from home. So what I'm suggesting is when it comes to claiming rent and mortgage interest, you've got these interesting issues for from a CGT main residence perspective deductibility in my mind is anything but clear.

And so that path of least resistance, that cents per per hour say option A, option B that's likely to be the way to go for the vast majority of us.