The Australian Taxation Office (ATO) has changed the way that taxpayers claim deductions for costs incurred when working from home.
Revised fixed rate method
The revised fixed rate method applies from 1 July 2022 onwards. The amount of the fixed rate is 67 cents per hour.
What’s covered by the rate
The revised fixed rate of 67 cents per work hour covers:
- energy expenses (electricity and gas)
- phone usage (mobile and home)
- internet
- stationery and computer consumables.
No additional deduction for any expenses covered by the rate can be claimed if you use this method.
For the first time, phone usage and internet expenses are included in the fixed rate method. These were previously excluded from the fixed rate method, which allowed a separate deduction to be claimed for these expenses. Note that under the new rules, if you use your mobile phone for work purposes when you are out-and-about, as well as at home, you can no longer claim a separate deduction for this use and still use the fixed rate method. If you wish to claim actual use of your mobile phone (or home internet), you must claim using the actual method for all working from home expenses (see below).
What can be claimed separately
- The decline in value of assets used while working from home, such as computers and office furniture.
- The repairs and maintenance of these assets.
- The costs associated with cleaning a dedicated home office.
Home office
The revised fixed rate method doesn’t require that you have a dedicated home office space to claim working from home expenses. So, if you work from the kitchen or living room, you can still claim a deduction.
Compliance and substantiation
You need to keep a record of all the hours worked from home for the entire income year.
The ATO won’t accept estimates, or a 4-week representative diary or similar document for this year.
Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.
Records must be kept for each expense that you have incurred which is covered by the fixed rate per hour (for example, if you use your phone and electricity when working from home, you must keep one bill for each of these expenses).
Actual cost method
The actual cost method hasn’t changed. You can claim the actual work-related portion of all running expenses. To claim this method, you must have an area set aside as a dedicated home office.
Compliance obligations include keeping detailed records for all the working from home expenses being claimed, including:
- all receipts, bills and other similar documents to show you have incurred the expenses, a record of the number of hours worked from home during the income year (either the actual hours or a diary or similar document kept for a representative 4-week period to show the usual pattern of working at home).
- a record of how you have calculated the work-related and private portion of the expenses (for example, a diary or similar document kept for a representative 4-week period to show the usual pattern of work-related use of a depreciating asset such as a laptop).
If you are claiming your working from home expenses, you can’t claim a deduction for expenses which have already been reimbursed by your employer.
