ATO changes rules around working-from-home deductions
The Australian Taxation Office (ATO) has changed how taxpayers claim deductions for costs incurred while working from home.
You can choose one of two methods to claim working-from-home deductions – the fixed-rate method (which has been updated) and the actual-cost method (which has not).
The revised fixed rate method applies from 1 July 2022 and can be used when you file your tax return for the 2022-23 financial year.
Under the new rules, the number of cents per work hour has increased from 52 to 67 cents. This revised fixed rate covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery and computer consumables.
If you use this method, you can't claim deductions for any other expenses.
However, you can make separate claims for:
- The decline in value of assets (such as computers and furniture) used while working from home.
- The repairs and maintenance of these assets.
- The costs associated with cleaning a dedicated home office.
The new fixed-rate rules require you to keep a record of all the hours worked from home for the entire income year. The ATO won’t accept estimates or a four-week representative diary or similar document from 1 March 2023.
Actual-cost method
You can claim the actual work-related portion of all running expenses, but you will need to keep detailed records for all the working-from-home expenses being claimed. This includes:
- All receipts, bills and other similar documents to show you've incurred the expenses.
- A record of the number of hours worked from home during the year.
- A record of how you've calculated the work-related and private portion of your expenses.
Expert advice from the ATO
ATO Assistant Commissioner Tim Loh gave three pieces of advice for taxpayers:
- Before deciding which of the two methods you want to use, make sure you're eligible to claim working-from-home expenses. To be eligible, 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. Also, you must incur extra expenses as a result of working from home.
- No matter which method you use, keep records. This will give you more flexibility to choose the method that gives you the biggest tax deduction.
- You can’t claim for things like coffee, tea, milk and other general household items, even if your employer may provide these kinds of things for you at work.