We are well into the 2023 tax season, with that the ATO has released their new guidelines for claiming working from-home expenses which will affect millions of individuals who are currently claiming these deductions.
Previously taxpayers were able to choose between three options to calculate their deduction, from 1 July 2022 onwards, individuals have two options. You can continue to claim your actual expenses, or you can use the revised fixed rate method. Under this revised method, individuals may claim as a deduction;
- 67 cents per each hour they have worked from home. This covers all additional costs incurred by the individual in relation to energy (utilities), internet, telephone, stationery and computer consumables as a result of working from home;
With this revised method most of the individuals working from home expenses will be covered. Individuals will be able to separately claim the work-related decline in value of depreciating assets, such as laptops, monitors and other office furniture.
Previously individuals were able to keep a 4 week representative record for their working from home claims. From 2023 onwards this is out the door, you will now need to keep a record of the total number of hours you have worked from home for the whole financial year.
There will be a transition/grace period for the 2023 financial year due to when the ATO released their new guideline. For the 2023 year you will be able to keep;
- A representative record of the total number of hours worked from home during the period 1 July 2022 to 28 February 2023, and
- A record of the total number of actual hours you worked from home for the period 1 March 2023 to 30 June 2023.
With the revised fixed rate method record requirement and the continued increase of living costs, you may want to compare using the fixed rate method versus the actual cost method for your expenses.
What you cannot claim
There are a few expenses as an individual working from home you are still unable to claim as a deduction, these include;
- Coffee, tea, milk and other general household items even if your employer provides these at work for you.
- Costs relating to your children and their education such as ipads, desks, subscriptions for online learning
- Any items that are provided or reimbursed by your employer such as a phone or laptop
- Generally, individuals are unable to claim for occupancy expenses such as rent, mortgage interest, water and rates.