Unusual work from home expense you can claim a tax deduction for

Jun 09, 2021

The rise of working from home has spurred sales of lighting and other photo equipment to improve people’s appearances on now-common Zoom calls.

Luckily the purchase of lighting or other equipment can be considered a work expense and claimed as a tax deduction.

Tax expert Adrian Raftery, principal of Mr Taxman, said it was possible to claim any work related office equipment and this includes better lighting setups and microphones to look and sound better during online calls.

The only limit is that “any expense has to be incurred while producing assessable income”.

With the pivot to online meetings and marketing, people and businesses are increasingly able to claim tax deductions for this type of equipment, including LED lights, microphones and small backdrops that can be set up behind a person’s chair.

Rob Ranoa, founder of online photography equipment retailer, Hypop, told news.com.au one of his business’s most popular items was the ringlight, which is a cheap way to improve lighting on Zoom calls or while taking photos.

“Even the little ones that clip onto people’s phones are really popular because their price is lower,” he said.

“If you can control the lighting and how you look, it always comes across better I feel,” he said.

Mr Ranoa said his business was increasingly catering to ordinary people who want to quickly take photos or video, and post them on social media.

“It’s not just professional photographers or videographers that are wanting our products, others are now becoming more aware of these product types.

“It’s part of the marketing mix now for a lot of these people, and we are not just catering to professional photographers anymore.”

The 36-year-old said Hypop’s sales had increased 250 per cent year-on-year thanks largely to the pandemic.

“Ever since the pandemic, our customer has really changed and the business has expanded to cater more to the normal person who is working remotely, and needs lighting for Zoom calls to make them appear more professional,” he said.

This includes university professors, who need more reliable lighting while they deliver online lectures, or other experts who may need to film training modules for colleagues.

“It’s hard to rely on light from windows, or a room light that’s not flattering,” Mr Ranoa said.

“If you have one or two LED lights, you can make your lecture look more professional to students or peers.”

Mr Ranoa said a lot of the time webcams were not enough, especially at night time, or if you were a gym or yoga instructor that needed wider shots.

“Lighting can range from $50 to $200 for an entry level set up,” Mr Ranoa said.

“Then you will probably need a microphone for about $50, or headset for about $100.”

Those who needed wider shots or wanted to have more lights and more control over these lights would need to spend more.

Businesses are also snapping up the equipment as they improve their online offerings.

Many buy light tents, which is a small light box, to take better photos of their products so they can offer them online or via delivery services like UberEats and Menulog.

Pitfalls to avoid

However, Mr Raftery warned that those considering buying equipment worth more than $300 during the end-of-financial-year sales won’t be able to claim much of it back as a deduction in this year’s tax return.

This is because any purchase over $300 must be depreciated and only the portion used in that financial year is allowed to be claimed.

For example if you buy something on June 30 then you will only be able to claim one day’s worth of depreciation in this year’s tax return.

You will have wait until next financial year to claim another full year’s worth of depreciation.

This makes it better to buy an expensive piece of equipment at the beginning of the year so you can claim the entire year’s worth of use, rather than a few weeks or days.

“Obviously smart retailers will be trying to sell things for $299 or less,” Mr Raftery said.

You also need to have a receipt for every expense and remember that if something is also bought for personal use, you should only claim part of the expense back.

“The ATO is looking at home office expenses as a potential audit area this year,” Mr Raftery said.

“So if you are a factory worker and you want to try and claim $2500 of home office expenses, maybe rethink it.”

Also keep in mind that when you claim something on tax, this does not mean you get the entire amount back in a tax refund.

“When you see things advertised as 100 per cent deductible, some people think they get the whole amount back on tax if they spend $1000,” Mr Raftery said.

“They are probably tricked by marketing into believing they get all their money back.”

People need to remember the money they get back will be the amount they would have paid in tax.

For someone paying around 40 per cent tax, claiming back $1 on your tax return, will save you 40 cents this year.

“That’s where people have been disappointed in the past, they spend $1000 and get 40 cents back,” Mr Raftery said.

“Most people only think about tax at this time of the year and savvy retailers know and understand this.”

 

 

 

 

 

 

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