The ATO are keeping a close eye on work from home (WFH) deductions to ensure taxpayers are claiming the correct deductions. There is a new fixed rate method for this financial year too. If you’re lucky enough to WFH or work in a hybrid arrangement read on for our tips to claim WFH expenses.
WFH deductions for the 2023 financial year are based on either the actual expenses incurred or a revised ‘fixed rate method’ of 67 cents per hour effective from 1 July 2022. The revised fixed rate method replaces both the previous fixed-rate (52 cents per hour) and the ‘covid-19’ or shortcut rate (80 cents per hour), and there are changes to what expenses are included.
The revised fixed rate method of 67 cents per hour does not require the taxpayer to have a dedicated home office space. This rate covers running expenses incurred, including:
- internet expenses
- phone expenses
- electricity and gas for heating, cooling and lighting
- stationary and computer consumables e.g. printer ink and paper.
If using the fixed method, a separate deduction is not available for any of the above expenses. However, you can include a separate claim for the following expenses:
- decline in value of assets used while working from home e.g. computer and office furniture
- repairs and maintenance of these assets
- cleaning of home office.
Records are required to be kept; the ATO will not accept estimates as proof of deductions. Timesheets, rosters, logs of time spent or a diary for the full year are sufficient evidence of working from home hours. Alternatively, a 4 week representative diary can be kept from 1 March 2023 as evidence. There is also a requirement that one bill for each expense (i.e. phone and internet expenses) should be kept.
The actual cost method remains unchanged for the 2023 financial year. As in prior years, detailed records are required for all the working from home expenses being claimed including evidence of calculation of the private use and work-related apportionment.
A reminder, you can’t claim a deduction for the below items under the working from home costs:
- coffee, tea, milk and general household items
- expenses where your employer reimburses you for the cost.
Please contact your Harris Black team member for additional information if required.