Claiming working from home deductions

The Australian Taxation Office has announced a change in the way taxpayers can claim deductions for costs incurred when working from home.

Currently there are two methods available to use to claim working from home deductions, “actual cost” or “fixed rate” method. The new changes only apply to the fixed rate method from 1 July 2022 and can be used within taxpayers 2022-2023 income tax returns.

To be eligible to claim working from home expenses, 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.
• you must incur additional expenses as a result of working from home.

Regardless of which method is chosen (Fixed Rate or Actual Cost), keeping records will provide more flexibility when choosing the method that gives the best deduction at tax time depending on your circumstances.

For taxpayers who have not kept records so far this income year, there are transitional arrangements in place for the 2022-23 financial year.

From 1 July 2022 to 28 February 2023, the ATO will accept a record which represents the total number of hours worked from home (for example a 4 week diary). From 1 March 2023 onwards, taxpayers will need to record the total number of hours worked from home.

It’s important to mention claiming things like coffee, tea, milk and other general household items, (even if your employer may provide these kinds of things for you at work) will not be accepted.

The revised fixed rate method can be used from the 2022–2023 income year onwards. The changes are:

Rate

• The cents per work hour has increased from 52 cents to 67 cents.

What’s covered by the rate

• The revised fixed rate of 67 cents per work hour covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables. No additional deduction for any expenses covered by the rate can be claimed if you use this method.

What can be claimed separately

• 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

• The revised fixed rate method doesn’t require you to have a dedicated home office space to claim working from home expenses.

Record keeping

• You will need to keep a record of all the hours worked from home for the entire income year – the Australian Taxation Office won’t accept estimates, or a 4-week representative diary or similar document under this method from 1 March 2023.
• Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.
• Records must be kept for each expense you have incurred which is covered by the fixed rate per hour (for example, if using your phone and electricity when working from home, you must keep one bill for each of these expenses).

Feel free to record your working from home hours using the following template.

The actual cost method hasn’t changed. Claiming the actual work-related portion of all running expenses is allowable.

This includes keeping detailed records for all the working from home expenses being claimed, including:

• all receipts, bills and other similar documents to show you have incurred the expenses, a record of the number of hours worked from home during the income year (either the actual hours or a diary or similar document kept for a representative 4-week period to show the usual pattern of working at home).
• a record of how you have calculated the work-related and private portion of your expenses (for example, a diary or similar document kept for a representative 4-week period to show the usual pattern of work-related use of a depreciating asset such as a laptop).

A reminder, if you are claiming actual working from home expenses, expenses which have already been reimbursed by your employer can not be included.