DEDUCTIONS FOR WORKING FROM HOME EXPENSES
If you are expecting to claim a deduction for expenses incurred while working from home in your next tax return, please read through this summary to understand what has changed and how to be prepared.
The Australian Taxation Office has changed its approach on what can be claimed and the required record keeping for those using the Fixed Rate Method.
The information about the new rules below relates to the Fixed Rate Method of claiming deductions only. The alternative method is the Actual Cost Method and you can read more about this by following the links at the bottom of this email.
From 1 July 2022, the following rules apply:
- New hourly rate of 67 cents.
- Phone and internet costs are now covered by this rate and no further separate claim can be made for these costs.
- Decline in value is no longer included in this rate and can therefore be claimed separately.
To be eligible, you will need to keep:
- Records of all the hours you work at home, for the entire tax year. If you cannot provide these for the period between 1 January 2023 and 30 June 2023, an estimate will no longer be sufficient.
- Receipts for all depreciating assets or equipment you use when you work at home. Note that if the receipt is addressed to a different householder, you will need to provide evidence that you have contributed to the payment of said expense.
For these assets, you will also need to keep record of work-related and personal use.
In addition to the changes to the Fixed Rate Method, the Shortcut Method has been removed. This was a temporary method introduced during COVID-19 and it is only available for income years between 2020 (from 1 March 2020) and 2022.
For further information, please read through the Working from home expenses and ATO Home-based business expenses.
Feel free to contact us or call 0416 919 036 if you would like any further advice in this area.