The Australian Taxation Office has recently updated the way that taxpayers can claim deductions relating to expenses incurred from working from home.
In prior years, you may have had the choice between three different methods;
- The actual method – which is calculated using a percentage of home office floor space to overall floor space.
- The fixed rate method – which is calculated at 52 cents per hour worked from home. Using this method you could also claim for home depreciation costs and other business expenses.
- The shortcut method – which is calculated at 80 cents per hour worked from home. This method incorporates all other business expenses and depreciation costs.
From 1 July 2022, the ATO has removed the last two methods, replacing them with the revised fixed rate method.
The revised fixed rate method is calculated based on a claim of 67 cents per each hour worked from home. Similar to the above fixed rate method, you can also claim additional deduction for business expenses, occupancy (bearing in mind that some occupancy costs can have other tax consequences) and depreciation costs. To claim using this method, from 1 March 2023 only, taxpayers will need to keep a detailed record of dates and hours work from home. For the period between 1 July 2022 and 28 February 2023, taxpayers need to have kept a 4 week diary of hours worked from home.
In summary, for the 2023 financial year and moving forward, taxpayers will have the option to continue using the actual method to calculating working from home costs, or move to use the new revised fixed rate method – just keep in mind the record keeping requirements of using the revised fixed rate method.
For further information, check out the ATO websites recent update using the link below:
Contributed by Tim Heuston.
