Did you hear that the working-from-home deductions have changed?
If you’re one of the 5 million Aussies now working from home then please keep reading!
The ATO recently announced changes to the way working-from-home tax deductions are calculated.
And more importantly, you may need to start keeping different records.
What are the changes?
For 2022-23 tax returns, the methods available to calculate working-from-home deductions are the:
- revised fixed rate method
- actual cost method (remains unchanged)
The temporary shortcut method is no longer available.
The key changes to the revised fixed rate method are:
- an increased rate – from 52 cents to 67 cents per hour worked from home
- the ATO removed the requirement to have a separate home office or dedicated work area.
- phone and internet expenses are now included in the rate
- the rate incorporates expenses where it’s time-consuming and difficult to work out your work-related use. This means the revised fixed rate includes expenses like electricity and gas usage, computer consumables, stationery costs as well as phone and internet expenses. So these items are covered under the cents per hour rate, rather than claimed separately.
In addition to the fixed rate, the ATO allows taxpayers to separately calculate and claim the decline in value of work-related equipment, office furniture, and any other running expenses not covered by the rate per hour (such as cleaning for a home office).
What records do you need to keep for the revised fixed rate method?
You’re going to need the right records to claim a deduction. This includes:
- a record of the hours worked from home for the entire income year (such as a timesheet, roster, diary or logbook).
- evidence of each of the expenses covered by the revised fixed rate method that you’ve incurred as a result of working from home (ie, a phone or electricity bill).
- evidence of equipment bought to work from home, such as furniture or equipment (this includes details of the supplier, the cost, and the date purchased)
- records to show personal vs work-related use of these items.
Help – I haven’t kept records this year!
For the 2022-23 income year only, the ATO has announced a transitional arrangement which means they’ll need:
- a record which is representative of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023, and
- a record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023.
If working from home is costing you quite a bit, it may be worth asking your accountant to compare your deductions under both methods to see which gives you the best result (as long as you have the correct records).
Want to learn more? Visit the ATO’s helpful website!
This content was kindly contributed by the Australian Taxation Office Corporate Affairs Team.
