Tax Deduction on Home Office Furniture

Lfring on 15/06/2021 - 13:08

I am thinking of getting an electric sit stand desk for my home office before the end of financial year, but not sure how much I can claim as a tax deduction. According to the ATO website, there are 3 ways to calculate home office expenses:

https://www.ato.gov.au/individuals/income-and-deductions/ded…

  1. Shortcut method (80 cents) – only available from 1 March 2020 to 30 June 2021
  2. Fixed rate method (52 cents)
  3. Actual cost method

If I use the Actual cost method, the desk (being over $300) would have to be depreciated over it's life time. It's my understanding that furniture is viewed by the ATO as having a longer life time than say computer equipment. So, it's likely that I will have to depreciate it over 10 years. It's also my understanding that you can only depreciate from the time you acquired the item. So, if I was to buy it with 5 days left in the financial year, i can only claim 5 day's worth of depreciation for this financial year. Please correct me if I am wrong here.

If I use the Fixed rate method, it's based on the number of hours worked at home for the financial year. So, regardless of how much the desk costs, the amount that i can claim is fixed. What happens if I don't buy any office furniture? Can I still claim home office expenses using this method? Is it like a no questions asked thing as long as you can prove that you worked from home?
I assume this would be the way to go since:
1. I wouldn't be able to claim much from the Actual cost method;
2. Future depreciation may not result in the same benefits if my income is varies quite a bit from year to year; and
3. I can still claim computer equipment costs separately.

I am curious as to how others on this forum plan on claiming office furniture as a tax deduction this year.

Financial

Comments

  • mskeggs on 15/06/2021 - 13:21
    +2

    Why not claim 1 or 2 for this year, then buy the desk in July and claim 3 next year?
    Though as you point out, it is only a few days, so if you can get a good deal now, no reason not to proceed.

    • fring on 15/06/2021 - 13:25

      That's an option I guess. Although EOFY sales will probably be over by then.

  • r3dfusi0n on 15/06/2021 - 15:07

    I had to do this last year for an office chair I got back in June 2020.

    From what I understand, the actual cost method is the only way you will be able to claim the office furniture.

    Since the desk is above the low value asset write off threshold, you must use decline in value to derive the deduction amount.

    You might be able to buy it now but forfeit the deduction from the decline in value for this tax year, but then claim decline in value for the remaining lifetime in future tax years.
    If that's the case then you should be able maximize your deductions with whichever method works out best this year while still deducting most of the applicable cost of the desk.

    You may want to post this to the ATO community forum as well:
    https://community.ato.gov.au/

    If the deal is something like a 20-30% discount on the normal price though you should buy it now regardless.

  • abb on 15/06/2021 - 15:39
    +1

    [shortcut / fixed rate methods] What happens if I don't buy any office furniture? Can I still claim home office expenses using this method? Is it like a no questions asked thing as long as you can prove that you worked from home?

    Yeah you get to claim the cents per hour, you don't need to buy anything. It's meant to cover your power, internet, and general wear on your house (and furnishings, assuming you choose to use some).

    You should have a log of hours worked at home. I can't remember if you can do a 4-week representative period or if you need to log every day (I've just been logging everything).

  • SmiTTy on 15/06/2021 - 19:26

    Prob not the solution you're after… But is there a cheaper alternative desk, that is less than 300

    That would allow u to get the full tax deduction this FY if that's what youre after

  • freefall101 on 16/06/2021 - 01:35

    The 80c is no questions asked. Just do that.

    Likely your portion of the bills for work plus a $300 desk will still be less than the 80c calc, unless you didn’t spend much time working from home.

  • mini2 on 16/06/2021 - 10:03

    Ask your accountant to confirm but running cost of the home office to be claimed under the 80 cents shortcut and your furniture to be depreciated over its lifetime. Yes depreciation kicks in from the day it was purchased so 5 days before EOFY means you're getting buckleys back for this FY. So why bother?

    • goodfella on 19/06/2021 - 10:26

      AFAIK, not from the purchase date, but from the date when "equipment is installed and ready for use". Say I bought a monitor today, but the delivery time is one month. That depreciation will start once it's delivered and installed, not from today. More on this here: https://www.ato.gov.au/Forms/Guide-to-depreciating-assets-20…

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