The Australian Taxation Office (ATO) has refreshed the way that taxpayers claim deductions for costs incurred when working from home. As such, the record keeping requirements and methods for calculating working from home deductions has changed for the 2022–23 income year onwards.
From the 2022–23 income year, the methods available to calculate working from home deductions are the:
- revised fixed rate method
- actual cost method.
While the actual cost method remains unchanged, the revised fixed rate method has been changed and updated from previous iterations (both during and pre the changes made for COVID-19 global pandemic).
The key changes between the previous and revised fixed rate are:
- an increased rate – from 52 cents to 67 cents per hour worked from home
- removal of the requirement to have a separate home office or dedicated work area
- inclusion of phone and internet expenses as well as electricity and gas usage, computer consumables and stationery costs
- taxpayers will now separately get to claim the decline in value of work-related equipment, office furniture, and any other running expenses not covered by the rate per hour
The revised fixed rate method can also be used by businesses that operate some or all of their business from home to claim home-based business expenses.
The revised Work from Home Tax Deduction also means a change in record keeping requirements, with effect from 1 March 2023. If you intend to use the revised fixed rate method for your 2022-23 Income Tax Return, you will need to have:
- from 1 July 2022 to 28 February 2023 – a record which is representative of the hours you worked from home
- from 1 March 2023 to 30 June 2023 – a record of the total number of hours you worked from home (such as a timesheet, roster or diary) as well as evidence you paid for each of the expenses you incurred that are covered by the fixed rate method (for example, a phone or electricity bill). You will also need records for any equipment you have bought to work from home, like technology or furniture (which provides details of the supplier, cost, date acquired).
It should be noted that the finalised PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home remains broadly unchanged from the draft PCG issued in November 2022, however the start date to commence daily record-keeping has shifted to 1 March 2023.
Have Questions?
If you have any questions about these changes, please don’t hesitate to get in touch.
