Worked from home in lockdown? You may be able to get $15 a week

Author
Frances Cook, NZ Herald,
Publish Date
Thu, 21 May 2020, 11:38AM
Working from home comes with increased costs, but there's now an easier way to claim for them. Photo / Getty Images
Working from home comes with increased costs, but there's now an easier way to claim for them. Photo / Getty Images

Worked from home in lockdown? You may be able to get $15 a week

Author
Frances Cook, NZ Herald,
Publish Date
Thu, 21 May 2020, 11:38AM

COMMENT:

The Herald's Cooking the Books personal finance podcast is here to get you the tips you need to weather the financial storm. Hosted by Frances Cook, with a new money expert featured on each episode.

If you worked from home during the lockdown, there's a nice little sweetener: you may be able to receive an extra $15 for each week.

It's up to your employer, but they now have the option to pay you a work-from-home allowance and claim it back from IRD as a business expense. But as the initial cost falls on the employer, they may not be willing or able to do so.

The self-employed have always been able to claim expenses back. They work out how many square metres of their house are used as a home office, turn it into a percentage of the entire house, and ask for a tax refund of that percentage on electricity, internet, rent or mortgage interest.

But it was more difficult for those in traditional employment.

You can almost see why. Fewer people worked from home, so there was no urgency to clarify a law when there were other, more pressing matters.

But Covid-19 changed all that. Everyone who could was suddenly working from home.

As with many changes from the pandemic, there's now a question mark over whether more of us will continue working from home once the virus is brought under control.

So to give credit where it's due, the IRD moved quickly and gave us all a simple set of options to help meet work from home costs.

It's all done through employers. So you need to first talk to them, and ask them to apply for the scheme on behalf of their employees.

They have the option to pay you an allowance for at-home costs, and then claim back from IRD as a business expense.

To claim it, you have two options.

You can make like someone who is self-employed, and calculate what percentage of your house was used as home office. Apply that percentage to bills including electricity, internet, and insurance, before submitting the final number to your employer.

Sounds a little complicated, and personally, I value my time more than that.

Then there's the easy option they've brought in for us: $15 flat, for working from home.

You don't mess around making calculations in the hopes of another $2, you just get a decent contribution to increased expenses for the time that you're at home.

The IRD has even filed this as "no evidence required". You just need to have been forced to work from home because of the pandemic, and your employer is giving you an allowance to cover costs.

Baucher Consulting director Terry Baucher said the new streamlined system applied from March through to September, and he wouldn't be surprised if it was fine-tuned after that.

"I would expect to see it recalibrated. They'll be working some of the numbers.

"Inland Revenue's data gathering is not to be underestimated. They will know, for example from GST returns, what some of those expenditures will be."

Baucher said Inland Revenue could be overwhelmed at this time of year but put priority on responding to online service requests, so that was the best place to start.

"First, talk to your employer and say look, this is working for us, but I'd like reimbursement.

"Employers should be talking to their accountant or directly to Inland Revenue," he said.

"[Inland Revenue] will probably point you to the determination we've been talking about, and you should basically be able to be paid $15 a week with no issues."

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Clarification:

An earlier version of this story referred to the allowance as a tax refund. It is an allowance which an employer can choose to claim as a business expense.