How to claim your energy bills back on tax

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It’s tax time, and it’s safe to say we’re all a bit confused about how to go about claiming things back on our next tax return. With so many of us working from home (WFH), word’s getting out that things like internet and energy bills could be tax deductible. Even Aussies who are used to claiming deductions may have a few questions this year, with the COVID-19 crisis shaking up the way things are done. Thankfully, it’s not all that hard to understand what to do once you wrap your head around your options.

We’ve collected some advice from the ATO and Australia’s biggest energy provider, Origin, to help you on your way.

How to claim your energy usage on tax

There’s a few ways in which you can claim some of the energy used while working from home on tax. Some are more straightforward than others, but it’s still best to consider all options to maximise your return.

In order to use any of these methods, you’ll need some kind of record to show how many days and hours you have worked from home. Here’s an easy way to work that out if you haven’t been keeping a log book.

  1. Work out how many days you’ve worked at home: Let’s say you commenced working from home on Monday, March 23. You’ll then figure out there are 100 days between March 23 and June 30, but only 72 of those were actual work days. Taken a couple of days off? Had a public holiday or two? Working with hypotheticals, this then may fall to 68 working days.
  2. Figure out how many hours that is: You’ll need to refer to your roster/timesheet/work diary or pay statement to figure out exactly how many hours you worked each week. If you worked 7.5 hours a day for all 68 of those working days, the total amount of hours you’ve worked will be 510.

Shortcut method

This is the easiest method, and therefore will likely be the most popular when tax time rolls around. The federal government is offering 80 cents for each hour you work from home, strictly between March 1 and June 30, 2020.

In order to be eligible to apply for this method, you’ll obviously need to be working from home, but also have incurred extra debts in relation to energy, internet and other expenses as a result. This method covers:

So, using the hypothetical as above, you’ll be able to get back Hours (510) x Shortcut rate (0.8) = $408. When doing your tax return, pop this amount in the ‘Other work-related expenses’ question, putting ‘COVID-hourly rate’ as the description.

Actual cost method

This method is best for those who pay high energy bills, including those required to operate extra technology or machinery from home. It may also suit those that have extra costs associated with their phone or internet that would not be adequately covered in the shortcut or fixed costs method.

Calculate your WFH electricity usage: Separate out your WFH expenses by cooling, heating and lighting. You may also like to calculate your computer costs.

calculate energy tax

  • Lighting (2 bulbs x 30W/0.03kW): Kilowatts (0.03) x Hours worked from home (510) x Number of light bulbs (2) = 30.6kW for that time period.
  • Air conditioner (3.5kW): Kilowatts (3.5) x Hours used a day (4) x Number of days used (28) = 392kW for that time period.
  • Heater (2kW): Kilowatts (2) x Hours used each day (3) x Number of days used (40) = 240kW for that time period.
  • Laptop (50W/0.05kW): Kilowatts (0.05) x Hours worked from home (510) = 25.5kW for that time period.

Transfer your usage amounts into dollar figures. Add all of those numbers together and you’ll find you’ve used 688.1kW of energy working from home. But seeing as your roommate or partner has likely been working under that same roof, it’s reasonable to half the shared expenses, bringing your personal total to 358.8kW. Find your electricity usage rate on your power bill and times that by your total usage. Total kilowatts (358.8) x Usage rate (0.25c) = $89.70.

Make sure your proposed expenses line up with your power bill: Trust us, tax fraud is not the route you want to go down. There’s no point exaggerating your working from home expenses when you’ll be required to send through a power bill, given you would’ve received one since you’ve been working from home.

Fixed cost method

This method is only suited to those with a working from home arrangement such as a home office. The rate covers energy expenses, as well as decline in value/cost of repairs to home office equipment and furniture. The FY19/20 rate is 52 cents per hour worked.

Unlike the shortcut method, this can be applied to the whole financial year, or just the period up until March, where the inflated ‘shortcut’ rate can take over. To use this method, you will have to either keep a record of your actual hours WFH for the full year, or a diary of a four-week period that’s representative of a whole year’s work.

4 easy steps to claiming your WFH energy expenses

To really grind down the bulk of the information above, we’ve made claiming your energy usage back on tax as easy as following four steps.

  1. Log your total hours worked from home: Using your pay slips, timesheets, rosters or personal log book, work out the hours you’ve worked, deducting any off-time such as lunch breaks.
  2. Find your power usage rate on your energy bill: Dig out your energy bill and find a figure that should say ‘usage rate’. This amount, in cents, is how much you pay per unit of power usage.
  3. Choose a method for claiming your usage: Do it all in one fell swoop by using the shortcut method, or break down your expenses into categories to find your actual WFH costs.
  4. Lodge your claim with the ATO: All that’s left to do is go online when your employer submits your yearly statement and follow the prompts on the ATO/MyGov site.

claiming energy tax inforgaphic

How your energy provider can help you during tax time

We’ve had a word with Australia’s largest energy provider, Origin, in order to see what it’s doing to help everyday Aussies navigate their taxes in this unusual climate.

Origin spokesperson, Stuart Osbourne, said the power giant is in the process of contacting customers to alert them that their power payment history is online, if it’s needed.

“For customers who are eligible to claim their energy costs on their upcoming tax return, we have made it easy for them to download their bills and payment history from the Origin app or from the My Account section of our website. We are proactively contacting customers to let them know this service is available to help save them time in calling us to request these records,” he said.

For those who’d rather stay away from the internet, Mr. Osbourne said that Origin is providing alternative arrangements.

He added: “Customers who are unable to access our website or app are always welcome to give us a call on 13 24 61 between 7am and 9pm Monday to Friday, or between 9am and 5pm on Saturdays. Our helpful call center staff can provide copies of past bills via post or email.”

Mr. Osbourne also assured customers that have experienced difficulty in paying their energy bills that Origin has systems in place to assist vulnerable households.

“We continue to provide additional support to customers who have been financially impacted by COVID-19, and I would encourage anyone in this situation to contact us so we can help out,” he said.

“Under additional protections put in place for customers impacted by COVID-19, we have paused all late payment fees and are not disconnecting or default listing any customers in financial distress until at least 31 July.”

Compare Energy Prices

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Image credits: Witthaya lOvE/shutterstock.com

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