Mar 6, 2023 Joel Hernandez

Changes to work from home tax claims

With the continuing trend towards working from home arrangements, the ATO has renewed the way taxpayers can claim deductions for costs incurred when working from home.

If you are eligible to claim working from home expenses, the methods available are the “actual cost” or “fixed rate” method. In the recent announcement in February 2023, the change only affects the fixed rate method.  This method is attractive because it is straightforward, as it consists of an hourly set rate calculation of additional running expenses incurred whilst working from home.

Regardless of the method chosen, do remember to keep all your receipts and relevant records.

Under the revised fixed rate method, the rate per work hour has increased to 67 cents (from 52 cents) and the requirement to have a dedicated home office space has been removed. The rate will take into account the claim for electricity and gas, phone and internet usage, computer consumables and stationery expenditure. You can still separately claim the work-related portion of depreciable assets such as office desks, chair desktops, laptops etc.

The revised fixed rate method will apply from 1 July 2022 for the 2022/23 income tax return. Taxpayers are required to have incurred the type of expenses covered by this revised method, and keep a record of all the hours worked from home for the entire income year. Estimates or a 4-week representative diary to determine the total number of hours worked from home will no longer be accepted by the ATO.

Due to the retrospective application of the revised method, the ATO will accept a representative record (for example a 4-week diary) for the period 1 July 2022 to 28 February 2023.  From 1 March 2023 onwards, taxpayers will need to record the actual number of work from home hours. You may use various resources such as work timesheets, rosters, logs, diaries etc. for record-keeping purposes.

The ATO has released a practical compliance guide (PCG 2023/1) to assist with the record-keeping requirements and methods for calculating the value of the deduction. If you need any clarification, please contact us.