Working from Home (WFH) has shifted from being a necessary requirement to more of an extra “perk” of the employment as many Australian businesses have returned to the office and are now operating as they did before the pandemic. It is key to understand the available options and eligibility criteria as the Australian Taxation Office (ATO) publishes its most recent revisions to WFH tax deductions.

 

If you work from home, you may be eligible to claim tax deductions for some of the expenses you incur as a result of your work.

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 within the set rate claim.

• taxpayers will now separately be able to claim the decline in value of work-related equipment, office furniture, and any other running expenses not covered by the rate per hour.

 

There are two methods that can be used to claim your work from home expenses:

 

Revised Fixed Rate Method

Eligibility for this method, you must:

• Incur additional running expenses as a result of working from home;
• Be working from home to fulfil employment duties, not just carry out minimal tasks like checking emails or taking calls.
• Have a record of the total number of hours you work from home and the expenses you incur while working at home; and
• Have records for the expenses the fixed rate per work hour doesn’t cover that show the work-related portion of those expenses.

The revised fixed rate method has increased from 52 cents to 67 cents per hour.

• You no longer need to have a dedicated home office space to claim for this method.
• This method includes electricity, gas, phone usage (mobile & home), internet, stationery and computer consumables. No additional deduction can be claimed for any of the above when using this method.

• you are able to separately claim a deduction for the work-related use of technology and office furniture such as chairs, desks, computers and bookshelves. For these items, you can claim, a full immediate deduction for items with a cost of $300 or less; or decline in value deductions over the life of the item if the item cost over $300.

• It no longer covers costs associated with cleaning a dedicated home office, these can also be claimed separately.
• Records must be kept of hours worked from home, note some transitional rules apply for the 2023 financial year:
• From 1 July 2022 to 28 February 2023 a record which is representative of the total number of hours worked from home will be accepted.
• From 1 March 2023 going forward all hours worked from home must be recorded. The ATO will not accept estimates or a shorter period representative diary.
• Records must also be kept for the expenses incurred which are covered by the fixed rate per hour.

 

Actual Cost Method

There have been no changes to the actual cost method.

You must have a dedicated home office space to use this method.

You will need to calculate the total running expenses you incur and apportion your deduction for the work-related portion.

Detailed records for all the work from home expenses being claimed must be kept, as well as a record of how the work-related and private portion of the expenses have been calculated.

 

How Can Alto Help?

Should you have any questions about the new substantiation requirements or maximising your work related deductions, reach out to the Alto team to discuss.

 

Author: Evan Jones