Working From Home Deductions Have Changed. Here’s How to Prepare for Tax Time

The Australian Taxation Office (ATO) has announced changes to the tax deduction associated with working from home.

For beauty therapists, trainers and brand representatives who complete any or all working hours from home, the shortcut method to completing a tax return is no longer available. Working from home deductions will now be calculated using either the revised fixed rate method, or the actual cost method (which remains unchanged).

From 1 March 2023, individuals will be required to keep a record of the total number of actual hours worked from home for the period, through to the end of the 22/23 financial year (30 June 2023).

In addition, for the 2022-23 income year only, the ATO has announced a transitional arrangement which means individuals are required to provide a record which is representative of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023.

The ATO recommends records be kept via any/all of the following relevant means:

  • a record of the hours worked from home for the entire income year (such as a timesheet, roster, diary or logbook)
  • evidence of each of the expenses covered by the revised fixed rate method that you’ve incurred as a result of working from home (ie, a phone or electricity bill)
  • evidence of equipment you bought to work from home, such as furniture or equipment (this includes details of the supplier, the cost, and the date purchased) 
  • records to show your personal vs work-related use of these items.

Other key changes to the revised fixed rate method have also been announced:

  • an increased rate – from 52 cents to 67 cents per hour worked from home
  • the ATO removed the requirement to have a separate home office or dedicated work area
  • phone and internet expenses are now included in the rate 
  • the rate incorporates expenses where it’s time-consuming and difficult to work out your work-related use. This means the revised fixed rate includes expenses like electricity and gas usage, computer consumables, stationery costs as well as phone and internet expenses. So these items are covered under the cents per hour rate, rather than claimed separately.  

In addition to the fixed rate, the ATO does allow taxpayers to separately calculate and claim the decline in value of work-related equipment, office furniture, and any other running expenses not covered by the rate per hour (such as cleaning for a home office). 

According to the ATO, around 5 million Australians work from home.

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