ATO announces changes to working from home deductions

The revised fixed rate method applies from 1 July 2022 and can be used when you are working out deductions for their 2022–23 income tax returns.  ‘First things first, make sure you are eligible to claim working from home expenses.

To claim your working from home expenses, you must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls. Also, you must incur additional expenses as a result of working from home.’

‘From 1 July 2022 to 28 February 2023, we’ll accept a record which represents the total number of hours worked from home (for example a 4 week diary). From 1 March 2023 onwards, you will need to record the total number of hours they work from home.’

Revised fixed rate method

The revised fixed rate method can be used from the 2022–23 income year onwards.

The changes are:

Rate

The cents per work hour has increased from 52 cents to 67 cents.

What’s covered by the rate

The revised fixed rate of 67 cents per work hour covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables. No additional deduction for any expenses covered by the rate can be claimed if you use this method.

What can be claimed separately

The decline in value of assets used while working from home, such as computers and office furniture.

The repairs and maintenance of these assets.

The costs associated with cleaning a dedicated home office.

Home office

The revised fixed rate method doesn’t require you to have a dedicated home office space to claim working from home expenses.

Record keeping

You need to keep a record of all the hours worked from home for the entire income year – the ATO won’t accept estimates, or a 4-week

representative diary or similar document under this method from 1 March 2023.  Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.

Records must be kept for each expense you have incurred which is covered by the fixed rate per hour (for example, if you use phone and electricity when working from home, they must keep one bill for each of these expenses).

Actual cost method

The actual cost method hasn’t changed. You can claim the actual work related portion of all running expenses.

This includes keeping detailed records for all the working from home expenses being claimed, including:

• all receipts, bills and other similar documents to show you have incurred the expenses, a record of the number of hours worked from home during the income year (either the actual hours or a diary or similar document kept for a representative 4-week period to show the usual pattern of working at home).
• a record of how you have calculated the work-related and private portion of their expenses (for example, a diary or similar document kept for a representative 4-week period to show the usual pattern of work-related use of a depreciating asset such as a laptop).

The ATO is reminding you that if you are claiming actual working from home expenses, you can’t claim a deduction for expenses which have already been reimbursed by your employer.

Article posted - 23 May 2023