The first thing to consider before claiming deductions for working from home (WFH) is that you are actually eligible to do so.
The Australian Taxation Office (ATO) recently revised the “fixed rate method” allowing WFH expenses (like bills and stationery) to be included in a 67 cent hourly rate – up from 52 cents.
Unlike the shortcut, however, depreciation of office equipment will now need to be calculated separately and workers will also be required to keep real-time records of their WFH hours in daily dairies or timesheets.
These changes, which are set to come into effect from March 1, 2023, aim to provide more clarity and flexibility for employees who continue to work from home.
Get your record keeping right this tax time
With this new rate comes stricter rules surrounding records kept for hours worked at home. Previously, the ATO accepted a record that represented the total hours WFH, such as a four week diary.
From March 1, 2023, those WFH must keep records:
of all the hours WFH for the entire income year – the ATO won’t accept estimates, or a 4-week representative diary or similar document
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
for each expense incurred which is covered by the fixed rate per hour (for example, if taxpayers use their phone and electricity when WFH, they must keep one bill for each of these expenses).
It’s important to note that the ATO has strict guidelines around what expenses can be claimed as WFH expenses.
The actual cost method hasn’t changed. Taxpayers can claim the actual work-related portion of all running expenses.
We encourage you to seek advice when submitting your return, after all with great records comes great responsibility (that’s our previous blog). We can help you understand your obligations and help you get your tax return right.
Give us a call on 07 5500 0898 or email info@mjmaccountants.com.au.
You can also connect with MJM Accountants on Facebook and post a review to our Google profile.
Source: ATO announces changes to working from home deductions