Can I claim tax deductions for working from home?

In Plain English

Based on the information provided, here's a breakdown of what might be relevant to claiming tax deductions for working from home:

  • Personal Services Income (PSI): If you're working as an individual (not through a company) and the income you earn is mainly a reward for your personal efforts or skills (rather than from a business structure or the use of equipment), there are specific rules about what expenses you can deduct. Generally, these rules limit your deductions to what an employee could claim.
  • COVID-19 Tests: If you're required to take a COVID-19 test to attend your workplace, you may be able to deduct the cost of the test.
  • General Deductions: Generally, you can deduct expenses you incur to earn your assessable income, but there are many exceptions.
  • Home Office Expenses: It can be difficult to claim home office expenses if you are considered an employee.
  • Dependant Tax Offset: You may be able to claim a tax offset if you maintain a dependant who is unable to work.

Detailed Explanation

The following legislative provisions may be relevant to your question:

  • Personal Services Income (PSI) and Deductions:
    • Section 84-10 of the Income Tax Assessment Act 1997 clarifies that the PSI rules don't automatically classify individuals as employees.
    • Division 85 of the Income Tax Assessment Act 1997 outlines specific deductions that individuals earning PSI cannot claim if they are not running a personal services business or receiving income as an employee or office holder.
    • Section 85-10(1) of the Income Tax Assessment Act 1997 states that if your income is considered PSI and you're not an employee, you can't deduct expenses that an employee wouldn't be able to deduct. For example, Ruth, an architect working as an independent contractor, cannot deduct travel expenses between home and the firm's premises because an employee couldn't deduct those expenses either.
    • Section 85-10(2) of the Income Tax Assessment Act 1997 provides exceptions, allowing deductions for expenses related to gaining work or insuring against loss of income.
  • COVID-19 Test Deductions:
    • Section 41-25 of the Income Tax Assessment Act 1997 allows individuals to deduct expenses for COVID-19 tests (PCR or approved rapid antigen tests) if the purpose of the test is to determine whether they can attend their workplace.
    • This deduction is not available for tests of a capital nature.
  • General Deductions:
    • Section 8-1 of the Income Tax Assessment Act 1997 states that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income or it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income.
  • Approved Occupational Clothing Guidelines 2017:
  • Dependant Tax Offset:
    • Subdivision 61-A of the Income Tax Assessment Act 1997 provides a tax offset to assist with the maintenance of certain types of dependants who are genuinely unable to work because of invalidity, or because of their care obligations.

Without more information about your specific work situation (e.g., whether you are an employee or contractor, the nature of your work, and the specific expenses you are trying to claim), it is difficult to provide more specific advice.