Changes to the way working from home deductions are claimed for 2023
The ATO has made changes to the way that working from home deductions can be claimed for your 2023 Tax Return.
Revised fixed rate method
If you have genuinely worked from home at any time from 1 July 2022 to 30 June 2023, you may be eligible to use the ATO’s revised fixed-rate (67 cents per hour) method to claim for:
• Energy expenses (i.e., electricity and gas) for lighting, heating/cooling, and to run electronic items used for work or business;
• Internet expenses;
• Mobile and home telephone expenses; and
• Stationery and computer consumables (e.g., printing paper and printer cartridges).
Under the revised fixed-rate method, a claim for the above running expenses is calculated at a fixed rate of 67 cents for each hour that you worked from home during the 2023 income year.
This is an alternative method to claiming for the above running expenses using the actual expenses method, which would require a separate claim for the work/business portion of each expense.
Claims for deductible running expenses not covered by the revised fixed-rate method (e.g., depreciation of a computer used for work or business) can be claimed under the actual method.
What records do you need to keep when using the ATO’s revised fixed-rate method?
You will need to keep some receipts, bills or invoices of the running expenses you have incurred in order to verify your claim.
You will also need to keep a record (e.g., a timesheet, diary or similar record) of the number of hours you worked from home during the year, basically as follows:
• From 1 July 2022 to 28 February 2023 – The ATO will generally accept a record of the number of hours worked from home over a representative period (e.g., a four-week period). This can then be used to estimate the total number of hours worked for this entire period.
• From 1 March 2023 – You need to keep a record of the total number of actual hours worked from home. This effectively means that you will need to make a record (e.g., a diary entry) of the number of hours worked from home on each occasion that you worked from home.
Actual cost method
The actual cost method allows you to claim a deduction for the actual expenses you incur as a result of working from home.
You may be able to claim a deduction for each of the expenses you incur, such as:
• Data and internet
• Mobile and home phone usage
• Electricity and gas
• Computer consumables (e.g. printer ink)
• Stationery
• The decline in value of assets used while working from home, such as computers and office furniture, as well as any maintenance and repairs of these items
• Cleaning (only if you have a dedicated home office).
What records do you need to keep when using the Actual cost method?
The actual cost method requires detailed calculations and records. For example, you will need to know and have records of the cost per unit of electricity and average units used per hour. If you plan to use this method.
You will need to keep a record for every expense you claim.
Running expenses, you need the following evidence to show you incur additional running expenses:
Receipts, bills or invoices which show the supplier, amount of the expense, nature of the goods, date it was paid and the date of the document.
Evidence of your personal and work-related use of the items or services you buy and use.
You can work out your work-related expenses using records for the entire year or over a 4 week period that represents your work use.
– For example, using a diary or itemised bill.