ATO announces working from home deductions

The Australian Taxation Office (ATO) has revised the way that taxpayers claim deductions for costs incurred when working from home. These updated changes better reflect contemporary working from home arrangements.

For the 2023 financial year and future years there are two methods to claim working from home deductions, being either the ‘Actual Cost’ or ‘Revised Fixed Rate’ method.

While the actual cost method remains unchanged , in this email we will outline the new criteria to claim the  ‘Fixed Rate Method’.   

‘Fixed Rate Method’ Changes

• The revised fixed rate method allows you to claim $0.67 per hour for work from home.

• You must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls.

Expenses Included In The Revised Fixed Rate Method Are:

• Energy costs (gas & electricity)
• Telephone (home & mobile)
• Internet & data
• Stationary and computer consumables
  • no additional separate deduction for any expenses covered by the rate can be claimed if you use this method
  
  You Can Claim A Separate Deduction For:
• The decline in value of assets used while working from home, such as computers and office furniture.
• The repairs and maintenance of these assets.
• The costs associated with cleaning a dedicated home office.

Home Office

• A designated work area in the home is no longer required under the revised fixed rate method.

Record Keeping

• Taxpayers need to keep a record of all the hours worked from home for the entire income year (eg timesheet, roster, diary) – the ATO won’t accept estimates, or a 4-week representative diary or similar document under this method from 1 March 2023.

• Records must be kept for each expense taxpayers have incurred which is covered by the fixed rate per hour (for example, if taxpayers use their phone and electricity when working from home, they must keep one bill for each of these expenses)
• If home contains multiple people claiming Working from home deductions, they need to check with each other as to not over claim on deductions.

 
Please see the ATO fact sheet
 

The new Working From Home deductions are now vastly different from the previous methods.  Should you have any questions or require further guidance please contact your trusted Ashfords Advisor.