As an employee who is working from home, you have to use things like the internet, electricity or your mobile phone for work. These fall under working from home tax deductions, which you can possibly claim on your tax return. However, you have to follow the methods approved by the ATO to claim these.
At the beginning of this year, the ATO announced some changes in the methods. The previously effective shortcut method was made ineffective. Also, the fixed rate method underwent some revision.
Currently, two methods will let you calculate the working-from-home deductions.
- Revised fixed rate method
- Actual cost method
The actual cost method has remained the same, while the revised fixed rate method has replaced the previous one.
Revised Fixed Rate Method
This method is effective from the 2022-23 income years onwards. Here’s what has changed compared to the previous one:
Rate
Previously, the rate was 52 cents per work hour, which has inclined to 67 cents per hour.
What Does This Rate Cover?
Since the rate has increased, it now includes expenses like energy, i.e., electricity and gas, phone usage, internet, computer consumables and stationery. You cannot claim additional deductions for any of these expenses if you decide to go with this method.
Claiming Separately
The following can be claimed separately:
- Repairs and maintenance of the assets you used while working from home, such as office furniture and computers
- The decline in these assets’ value
- Cost of cleaning the dedicated home office
No Need For Home Office
Having a dedicated home office space is no longer mandatory to claim working-from-home deductions.
Record Keeping
Regarding records, after 1 March 2023, the ATO will not accept any estimates, a 4-week representative diary or any similar document. Taxpayers must keep a record of every hour they worked from home for the complete year.
The records of hours can be in any form, but they must be kept as they occur. Rosters, timesheets, a diary for the whole year or logs of time you spent accessing the business systems are accepted.
You have to keep records of every expense covered by this method. You must keep the bill if you use your phone while working from home. The same goes for electricity.
Actual Cost Method
This method has not changed at all. You get to claim the actual work-related part of all running expenses. To claim deductions using this method, you must keep detailed records. Anything that can prove that you have incurred the said expenses should be kept, such as bills, receipts and similar documents.
You have to keep a record of the count of the hours you worked from home as well. It can be the actual hours or a 4-week representative diary that can demonstrate the pattern of working from home.
Along with these, you also need a record to show that you have calculated the private and work-related parts of your expenses. The ATO has clearly stated that if the employer reimburses any expense, you cannot claim a deduction for it.
If you are worried about what method suits you, you should contact a tax accountant. Here at Clear Tax Accountants, we offer professional and personalised accounting services for individuals and businesses.
Whether you need a simple tax consultation or a comprehensive financial solution, we can tailor our services to suit your specific situation and goals. You can reach us by phone, email, or through our website. Don’t miss this opportunity to save time, money, and hassle with Clear Tax Accountants.
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