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ATO announces changes to working from home deductions

The Australian Taxation Office (ATO) has refreshed the way that taxpayers claim deductions for costs incurred when working from home. The changes better reflect contemporary working from home arrangements.

Assistant Commissioner Tim Loh explained that taxpayers can choose one of two methods to claim working from home deductions: either the “actual cost” or “fixed rate” method. Only the fixed rate method is changing.

The revised fixed rate method applies from 1 July 2022 and can be used when taxpayers are working out deductions for their 2022–23 income tax returns.

‘First things first, make sure you are eligible to claim working from home expenses. To claim your working from home expenses, you must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls. Also, you must incur additional expenses as a result of working from home.’

‘No matter which method you use, make sure to keep records. This will give you more flexibility to choose the method that gives you the best deduction at tax time depending on your circumstances.’

Mr Loh said these changes provide benefits for those using the revised fixed rate in 2022–23.

‘Items that are difficult and tedious for everyday Aussies to calculate actual work-use, like phone, internet and electricity expenses, are included in the revised rate. Assets and equipment that typically give taxpayers a bigger deduction, such as technological items and office furniture, are not included in the revised rate and need to be claimed separately.’

‘Another benefit is that you no longer need a dedicated home office to use the fixed rate method.’

Mr Loh reassured taxpayers who haven’t kept records so far this income year that transitional arrangements are in place for 2022-23.

‘From 1 July 2022 to 28 February 2023, we’ll accept a record which represents the total number of hours worked from home (for example a 4 week diary). From 1 March 2023 onwards, taxpayers will need to record the total number of hours they work from home.’

‘And remember, you can’t claim for things like coffee, tea, milk and other general household items, even if your employer may provide these kinds of things for you at work.’

Taken from Australian Taxation Office Media Release on 16 February 2023.

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