If you work from home, this update is for you. With how we work dramatically changing since the days of COVID-19 and lockdown, more people are enjoying flexible working arrangements and working from the comfort of their homes. In response to this ongoing trend, the Australian Taxation Office (ATO) has updated its working-from-home (WFH) record-keeping requirements, making it easier to calculate your deductions for the 2022-23 income year and onwards.
From the 2022-23 income year, the methods available to calculate WFH deductions are:
- Revised fixed rate method
- Actual cost method
The actual cost method remains unchanged, whereas the revised fixed rate method has been updated to reflect contemporary WFH arrangements.
The Revised Fixed Rate Method.
The revised fixed rate method offers a simpler way to calculate expenses associated with WFH and the need for time-consuming calculations. The fixed rate has increased from $0.52 to $0.67 per hour working from home. This rate automatically includes electricity and gas, phone and internet usage, computer consumables and stationery. In addition to this, taxpayers can separately claim the work-related portion of the decline in value of depreciating assets like office furniture and technology. The revised fixed rate method can also be used by businesses that operate some or all of their business from home to claim home-based business expenses.
If you plan to submit your WFH deductions via the revised fixed rate method you need to have:
- 1 July 2022 to 28 February 2023. A record that is representative of the hours you worked from home.
- 1 March to 30 June 2023. A record of the total number of hours you worked from home. This can be in the form of a timesheet, roster or diary. You will also need evidence that you paid for the expenses incurred, that are covered by the fixed rate method. For example, a phone or electricity bill. Finally, you need records of any equipment purchases to work from home; technology, furniture etc. These records need to provide details of the supplier, cost and date acquired.
The Actual Cost Method.
The actual cost method remains the same and is still an option available to taxpayers if they choose. Although a record of the hours worked from home from 1 July 2022 to 28 February 2023 needs to be kept. In addition to this, from 1 March 2023 to 30 June 2023, a record of the total number of hours worked from home, the evidence of the expenses covered by the fixed rate method, phone or electricity bills, and records of equipment bought to work from home need to be submitted.
The changes made by the ATO reflect the evolving nature of working from home. They are designed to make it easier for taxpayers to claim the deductions they are entitled to while reducing the amount of administration time. To speak to our accounting team about these changes to WFH or your tax return, contact us at support@walkerhill.com.au.
