2023 Working from Home Tax Deductions

A reminder to our clients that the ATO has updated the way you claim deductions for your home running expenses when you are working from home.

Claiming working from home expenses

There are now two methods to claim your working from home expenses:

  • The recently revised fixed rate method, or
  • The actual expense method.

key change is that you do not need to have a separate home office or dedicated work area set aside in your home in order to rely on the fixed rate method.

Fixed Rate Method

From 1 July 2022, a rate of 67 cents per hour applies to energy expenses (electricity and gas), internet expenses, mobile and home phone expenses, and stationery and computer consumables.

You can separately claim other costs, such as depreciation on computers or other running costs not referred to above.

What proof does the ATO need that I am working from home?

You need to keep the following records to prove your working from home tax deductions for the 2023 financial year:

  • A record which is representative of the total number of hours you worked from home during the period from 1 July 2022 to 28 February 2023; and
  • A record of the total number of actual hours you worked from home for the period 1 March 2023 to 30 June 2023.

For the 2024 and later financial years, the ATO expects you to keep a record for the entire income year of the number of hours they worked from home during that income year. An estimate for the entire income year or an estimate based on the number of hours worked from home during a particular period will not be accepted

You also need to keep a copy of at least one document for each running cost you have incurred during the year which is covered by the fixed rate method. This could include invoices, bills or credit card statements. Where bills are in the name of one member of a household but the cost is shared, each member of the household who contributes to the payment of that expense will be taken to have incurred it. For example, a husband and wife, or flatmates where they jointly contribute to costs.

Actual method

As the name suggests, you can claim the actual additional expenses you incur when you work from home (and reduce the claim by any personal use and use by other family members). However, you will need to ensure you have kept records of these expenses and the extent to which the expenses relate to your work.

Using this method, you can claim the work-related portion of:

  • The decline in value of depreciating assets – for example, home office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices.
  • Electricity and gas (energy expenses) for heating, cooling and lighting.
  • Home and mobile phone, data and internet expenses.
  • Stationery and computer consumables, such as printer ink and paper.
  • Cleaning your dedicated home office.

Be careful with this method because the ATO is looking closely to ensure these expenses are directly related to how you earn your income. For example, you can’t claim personal expenses such as coffee, tea and toilet paper even if you do use these items when you are at work. Nor can you claim occupancy expenses such as rent, mortgage interest, property insurance, and land taxes and rates unless your home is a place of business. It is unusual for an employee’s home to be classified as a place of business.

https://www.ato.gov.au/individuals/income-deductions-offsets-and-records/deductions-you-can-claim/working-from-home-expenses/

 

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