Changes to Work from Home Deductions

1 March 2023 marked a significant change to the record keeping requirement for those working from home in claiming working from home deductions in your income tax returns moving forward. The ATO has recently announced changes to working from home deductions and the shortcut claim method (80 cents per work hour) is no longer available. We have summarised the recent changes below:

From 1 July 2022 to 28 February 2023:

• The ATO will accept diary records (entries over the span of 4 weeks showing total number of hours worked from home).

From 1 March 2023 onwards:

• You will need to keep an ongoing diary with actual hours worked with supporting evidence (e.g. timesheets, rosters, time-tracking apps) in order to claim working from home deductions. The diary method or estimates of hours worked previously used will not be accepted by the ATO.

You can use the following methods when claiming work from home deductions in 2023:

• The new revised Fixed rate method:
  • Dedicated work area no longer required.
  • New rate of 67 cents per hour includes:
    • Electricity and gas
    • Phone usage and internet
    • Stationery, printer, and computer consumables
  • What can be claimed addition to the above rate:
    • Decline in value of assets used while working from home (e.g., computers and office furniture)
    • Repairs and maintenance of working from home assets
    • Costs associated with cleaning a dedicated home office
• Actual cost method:
  • Receipts and bills showing expenses has been incurred with a record on how work-related portion has been calculated. E.g., Electricity, gas, phone, internet, stationery, cleaning of dedicated home office, printer, and computer consumables

You can read more from the ATO press release on working from home changes here.

We recommend that you keep detailed records of working from home hours and receipts of all expenses incurred. This will allow us to calculate the best possible deduction for you when completing your annual tax return. Please do not hesitate to reach out to us should you require any assistance with the above information.

– Catherine Stojcevska

Posted 23.03.2023

This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.