By Tehani Silva, Accounts Officer.
As you are aware, if you work from home, you can claim a tax deduction for the work-related proportion of household costs. The Australian Taxation Office (ATO) has recently announced that home office claims will change for the 2023 financial year.
The main change would be from 1st of March 2023, in order to claim home office expenses as per the fixed rate method, individuals will be required to record all time spent working. Moreover, for the 2023 financial year, the 80 cents shortcut method will no longer be available.
Changes to Fixed Rate Method
Firstly, to be eligible to claim the revised 67 cents Fixed Rate Method you must meet all the following criteria:
- Work from home must be substantive and directly related to the income producing activities.
Minimal tasks like checking emails or making work related phone calls will not be considered substantive. You will not be required to have a designated workspace at home.
- You must incur additional running expenses and must not be reimbursed for the costs. An employee who works from home two days a week but resides with his/her parents and does not contribute to the running costs will not be eligible to claim a home office deduction. Additional running costs include internet, electricity, mobile phone, and stationery expenses.
- You must keep relevant records for the time spent working from home.
Timesheets or rosters are required to show the exact number of hours spent working from home. The old method of keeping a diary for one month and extrapolating that over the year will not be accepted. You must also provide at least one invoice for the additional running costs such as electricity, internet, mobile phone, or stationery. If the invoice is not in your name, you must show evidence that the expense is shared, this could include a bank transaction or evidence that the bank account used to pay the expense was a shared account.
This method covers the cost of electricity, internet, mobile and stationery, on what the ATO considers to be a fair and reasonable basis. This means you cannot claim a separate deduction for any of these expenses. You may still claim depreciation for assets used to carry out your employment duties, however you must keep a four-week record to show personal and income producing use of the depreciating assets.
The ATO has not announced any changes to the Actual cost method.
If you have any questions regarding these changes, please reach out to our Tax experts for further assistance.
The information provided in this article is general in nature and does not take into account any person or entity's particular financial situation or needs. Please contact us for advice specific to your circumstances.
This information is current at the time of publication and further updates may have occurred since that date.