ATO Update | Working from home deductions have changed
Are you one of the 5 million Aussies now working from home?
If you are, you may be interested to know that the ATO recently announced changes to how you calculate your working from home tax deduction.
And more importantly, you may need to keep different records.
What are the changes?
For 2022-23 tax returns, you can calculate your working from home deductions using either the:
- Revised fixed rate method.
- Actual cost method (remains unchanged).
You can no longer use the temporary shortcut method.
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 does allow 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 I need to keep for the revised fixed rate method?
You must have the right records. You’ll need:
- 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 you 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 your personal vs work-related use of these items.
Haven’t kept records this year? For the 2022-23 income year only, the ATO has announced a transitional arrangement which means you’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 you 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 comparing your deductions under both methods to see what is best for you or see a registered tax professional for advice. But remember, you must keep the correct records.
Want to learn more? Visit ato.gov.au/home.