Changes to Working from Home deductions

If you include Working From Home deductions in your annual tax returns you may want to read further as the rate has changed and also the requirement to keep detailed records.

The Australian Taxation Office (ATO) has made some revisions to the working-from-home deductions which implement stricter record-keeping requirements and a new rate per hour.

Working-from-home deductions can be claimed by two methods. Either the “actual cost” or “fixed rate” method.

And with the recent announcement made by ATO, only the fixed rate method is changing.

Fixed Rate Method

• Applies from 1 July 2022
• Can be used when taxpayers are working out deductions for their 2022-23 income tax return

Revised Rate:

• 67 cents per work hour

Eligibility:

• Must be working from home to fulfil employment duties.
• The work cannot be minimal things like occasionally answering the phone or checking emails; it must be directly tied to the income producing activities.
• Must incur additional expenses as a result of working from home.
• Must keep the relevant records

What is included in the revised rate?

• Mobile and Home phone expenses
• Electricity and gas
• Internet
• Stationery
• Computer consumables

Note: No additional deduction for any expenses covered by the rate can be claimed if you use this method.

What can you claim separately?

• The decline in value of assets used while working from home such as computers and office furniture
• Repairs and maintenance of these assets
• Costs associated with cleaning a dedicated home office

Keeping of records

• The ATO will not accept estimates, a 4-week representative diary, or any other similar document under this approach starting on 1 March 2023.  Therefore, taxpayers must keep a record of all the hours they worked from home during the whole income year.
• Any forms that record the worked hours such as timesheets, rosters, logs of time spent or a diary for the full year will be accepted
• Taxpayers must keep records of each expense incurred which is covered by the fixed rate per hour
• One document (such as an invoice, bill or credit card statement) for each type of additional running expense that was incurred in the income year.

Benefit

• An advantage of using the fixed rate technique is that you are no longer required to have a separate home office.

Whether you use the actual cost or fixed rate method, always make sure to keep records.

And no matter which method is used, taxpayers cannot claim the full amount immediately if they purchase assets and equipment for work that costs more than $300.

To learn more about these changes, please visit this link.

If you need any assistance or clarification, please contact:

Warren Maris (BCom, FIPA, FFA) Managing Director of Magnus Business Advisers and Accountants on 07 3483 0100.