For the 2023FY the ATO has changed how taxpayers calculate and claim a tax deduction for working from home expenses.
In 2021FY the ATO introduced a short-cut rate of $0.80 per hour – that option expired in the 2022FY, and so has the fixed rate method of $0.52 per hour of working from home.
We now see the introduction of a NEW fixed rate of $0.67 per hour, along with significant changes to the record keeping requirements.
The new rate will cover the following expenses:
Data and Internet
Mobile and home phone usage
Electricity and gas
Computer consumables (e.g., paper & printer ink)
Stationery
If you elect to claim using the fixed rate method, you won’t be able to make a subsequent claim for any of the above listed items.
You can however also claim:
Decline in value (depreciation) of office furniture, equipment and any repairs and maintenance on these items.
Other working expenses incurred as a result of working from home that aren’t included in the hourly rate.
Working From Home Record Keeping Requirements
The ATO has also signaled that in order to rely on the new fixed rate, they expect taxpayers to maintain records of hours worked from home, as well as demonstrate that they have incurred the expense.
For the 2023-24 and later income years, to claim work from home deductions using the fixed rate method you must keep a record for the entire income year of the number of hours you’ve worked from home during that year. You cannot use an estimate based on the average hours you work from home. Records can include:
Timesheets
Rosters
A Diary of similar document kept contemporaneously.
For the 2023 Financial Year you will need to keep:
Record that is representative of number of hours from1 July 2022 to 31 December 2022
Record of actual hours from 1 January to 30 June 2023
In addition to your hours worked from home records you will also need to show that you have incurred expenses that are covered in the rate. This includes:
Electricity, mobile, internet costs (You will need one monthly or quarterly bill.)
The bill should be in your name – if it is in someone else’s name, you will need to show you have contributed to paying the bill (such as joint credit card or lease agreement)
For stationery and computer consumables, you must keep a receipt for each item purchased.
Note you do not have to incur costs for every included expense. E.g., if your employer supplies a mobile phone for your use but when you work from home you use your own internet and power, you will still be able to use the fixed rate method.
Any depreciable items you will need to keep receipts and it needs to be in your name.
If your employer provides or reimburses you for office furniture, you cannot claim a deduction.
If you also use these items for non-work use (e.g., laptop for gaming, paying personal bills etc.) you need to apportion your work-related claim.
To do this you will need to keep a record of personal vs work related use for a 4-week period.
Failure to maintain records will mean that if audited the ATO will decline any working from home claim. You may then be able to claim under the ‘actual costs’ method, however there is significantly more onerous record keeping requirements for that method.
How we can help
We have developed a worksheet for you to use to ensure you are keeping the required records. If we are your tax agent, we will expect you to provide the required records to us when we prepare your tax return.
Download our Working from Home Record Spreadsheet here.