The Australian Taxation Office (ATO) has announced changes to the way working from home deductions are calculated for the 2023 financial year (FY23). These changes come into effect on 1 July 2022. The biggest change is that the temporary COVID shortcut method is no longer available. This method allowed taxpayers to claim 80 cents per hour worked from home, without having to keep any records. However, the ATO has now decided to discontinue this method, much to the regret of us all!
As a result, taxpayers who want to claim working from home deductions for FY23 will need to use the revised fixed rate method or the actual cost method. The revised fixed rate method is 67 cents per hour worked from home, and it covers expenses such as:
- Electricity and gas
- Phone and internet usage
- Computer consumables
- Stationery
You no longer need to have a dedicated home office to use the revised fixed rate method. This represents a broad widening on the eligibility. However, you still need to be able to demonstrate that you incur additional running expenses as a result of working from home. The actual cost method allows you to claim the actual cost of all work-related expenses, including:
- The decline in value of depreciating assets, such as computers and office furniture
- The repairs and maintenance of these assets
- The costs associated with cleaning a dedicated home office
If you choose to use the actual cost method, you will need to keep detailed records of all your expenses. This includes receipts, invoices, and other documentation that shows the amount and date of the expense. The ATO has also announced that record keeping requirements will be stricter for FY23. From 1 March 2023, taxpayers will need to keep a record of the total number of hours they work from home. This record can be in the form of a timesheet, roster, or diary.
The changes to working from home deductions for FY23 mean that taxpayers will need to be more careful about keeping records of their expenses. If you are unsure about whether you can claim a deduction, it is always best to speak to an accountant.
