The Australian Tax Office (ATO) is revising the way remote workers can claim tax deductions for costs incurred when working from home.
Starting 1 July 2023, the cents per work hour that can be claimed under the revised “fixed rate” method would be increased from 52 cents to 67 cents.
This higher rate would cover energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables, according to the ATO.
“Assets and equipment that typically give taxpayers a bigger deduction, such as technological items and office furniture, are not included in the revised rate and need to be claimed separately,” said Tim Loh, assistant commissioner at the ATO, in a statement.
Expenses that can be claimed separately would also include repairs and maintenance of computers and office furniture, as well as the costs associated with cleaning a dedicated home office.
“And remember, 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,” Loh said.
Stricter Rules Around Record-Keeping
The revised rules will be loosening in terms of home offices but will be stricter in record-keeping.
Having a dedicated home office is no longer a requirement under the revised “fixed rate” method, according to the ATO.
“The revised fixed rate method doesn’t require taxpayers to have a dedicated home office space to claim working from home expenses,” the ATO said.
However, accepted record-keeping documents will be changed starting 1 March 2023.
“From 1 July 2022 to 28 February 2023, we’ll accept a record which represents the total number of hours worked from home,” Loh said, referring to four-week representative diaries or similar documents.
“From 1 March 2023 onwards, taxpayers will need to record the total number of hours they work from home.”
According to the ATO, the changes to the fixed rate method “better reflect the contemporary working from home arrangements.”
Other methods
The changes come as the government ends the popular “shortcut method” that was first introduced amid the pandemic, where taxpayers could claim 80 cents per hour for all their running expenses, reported ABC News.
This leaves taxpayers with the revised “fixed rate” method and the “actual cost” method, which won’t be undergoing any changes.
The “actual cost” method includes keeping detailed records for all work from home expenses, including receipts, bills, and other documents that indicate incurred expenses.
A record of the number of hours worked from home during the income year, as well as how taxpayers calculated the work-related portion of their expenses, will be asked.
“No matter which method you use, make sure to keep records. This will give you more flexibility to choose the method that gives you the best deduction at tax time depending on your circumstances,” Loh said.
The assistant commissioner added that employees also need to ensure that they are eligible before claiming their tax deductions.
“To claim your 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. Also, you must incur additional expenses as a result of working from home,” Loh said.
In Australia, 41% of employees regularly worked from home in August 2021, according to data from the Australian Bureau of Statistics.
