The COVID-19 pandemic forced many Australians to adapt to a new work environment ‒ their homes. As the pandemic is now a thing of the past, working from home has become the new norm for many Australians.
As a result of the pandemic, the Australian Taxation Office introduced new rules and guidelines for claiming tax deductions related to working from home. With Australia moving on from the pandemic situation, the Australian Taxation Office has changed the methods of claiming home expenses for work in the 2022 – 2023 tax year.
These changes will impact taxpayers who want to claim home work expenses in their individual tax returns.
In this blog post, our specialists at Accountants Direct discuss the proposed changes, the impact on taxpayers, and the record-keeping specifications.
Proposed Changes To Home Work Expense Claim Methods
The Australian Taxation Office has a new fixed- rate methodology for calculating tax deductions related to working from home. This method will replace the prior deduction method, and taxpayers will be able to claim a deduction of $0.67 for each hour working from home.
However, the method comes with important changes regarding what can and cannot be claimed and the additional record-keeping specifications.
Important Changes In The Method
The revised methodology covers the following expenses that you utilise in order to conduct your work from your house’s office space:
1) Mobile data
2) Internet
3) Mobile phone usage
4) House phone usage
5) Electricity
6) Gas
7) Computer consumables like printer ink
8) Stationery
Taxpayers cannot claim an additional deduction for these expenses listed in the revised methodology. For example, if you use your own mobile phone or electricity when working at home, you cannot claim a separate deduction for these expenses.
Assets Used While Working From Home
On the other hand, a separate deduction for the depreciation of assets used by working from home, examples being laptops and office desks, and also any costs for maintaining and fixing can be claimed.
You can also claim additional working expenses that are not included in the fixed rate method. This means that it’s important to keep accurate records of all the expenses you incur while you work from your house.
Record-Keeping Requirements
In order to utilise any deduction for the home work expenditure under the revised methodology, taxpayers will need to maintain complete, accurate and valid records of the following:
1) Hours worked from home in the tax year (input into a time log, roster or notebook as evidence).
2) Supporting documentation for payments made for the expenditure listed in the revised methodology (i.e., if you make use of your mobilephone and internet, keep your bills for both expenses).
Keeping Accurate Records
Good record-keeping is a necessity, and there are various applications or software available that can aid you. You can conduct research and select whichever record-keeping option is convenient and best for your specific needs and lifestyle.
There are endless options out there, but some popular choices include:
1) Mobile apps for receipt capture and storage of monthly and quarterly bills
2) Desktop apps for credit reporting and spending tracking
To Summarise The Above
- The revised methodology for calculating tax deductions related to working from home provides a standard deduction of $0.67 per hour you work from your house.
- Taxpayers cannot claim another deduction for the expenditure listed in the revised methodology.
- To claim your home work expenses using this methodology, you will have to keep a record of the hours worked and support the payments made for the expenditure.
- It is essential to keep accurate records to avoid any discrepancies and errors in tax returns. Taxpayers can choose from various applications and software to maintain records, but it is essential to choose a tool that best suits their needs.
It’s recommended that you familiarise yourself with the ATO’s proposed changes and keep an eye out for updates to avoid any confusion. If you have any questions or need help with your individual tax return, do not hesitate to contact our qualified tax professional at Accountants Direct. Take control of your tax return and start saving money today!
Maximise your work from home tax deductions with the Australian Taxation Office’s proposed changes for the 2022-23 tax year. Stay updated with the latest information and keep accurate records to ensure you claim everything you’re entitled to. Don’t forget to consult a qualified tax professional if you need help with your individual tax return.
Stephen is the CEO of Accountants Direct and is a Professional Director, ASIC Agent, Startup Advisor & Investor & Capital Raising Specialist.
Contact Stephen or his team if you have any questions about this post or any business matter in general.
