The 2023 tax year sees changes in how taxpayers calculate and claim a tax deduction for working from home expenses.
You might remember that with the large shift to working from home, the ATO introduced a short-cut rate of $0.80 per hour – that option expires in the 2022FY, as does the alternative fixed rate method of $0.52.
Instead, we see the introduction of a NEW fixed rate of $0.67 per hour, along with significant changes to record keeping requirements.
The new rate will cover the following expenses:
- Data and Internet
- Mobile and home phone usage
- Electricity and gas
- Computer consumables (i.e printer ink)
- Stationery
If you elect to claim using the fixed rate method, you won’t be able to make a subsequent claim for any of the included items (e.g. if you work from home but also use your mobile phone substantially for work use)
You can however also claim:
- Decline in value (depreciation) of office furniture, equipment and any repairs and maintenance on these items
- Other working expenses incurred as a result of working from home that aren’t included in the hourly rate
Working From Home Record Keeping Requirements
The ATO has also signalled that in order to rely on the new fixed rate, they expect taxpayers to maintain records of hours worked from home, as well as demonstrate that they have incurred expenses.
For the 2023-24 and later income years, to claim work from home deductions using the fixed rate method you must keep a record for the entire income year of the number of hours you’ve worked from home during that year. You cannot use an estimate based on the average hours you work from home. Records can include:
- Timesheets
- Rosters
- A Diary of similar document kept contemporaneously.
For the 2023 Financial Year you will need to keep:
- Record that is representative of number of hours from1 July 2022 to 31 December 2022
- Record of actual hours from 1 January to 30 June
In addition to hour records you will also need to show that you have incurred expenses that are covered in the rate. This could include:
- For Energy, mobile, internet costs you much keep one monthly or quarterly bill.
- The bill should be in your name – if it is in someone else’s name, you will need to show you have contributed to paying the bill (such as joint credit card, lease agreement)
- For stationery and computer consumables, which are occasional expenses, you must keep one receipt for an item purchased
Note you do not have to incur costs for every included expense. E.g., if your employer supplies a mobile phone for your use but when you work from home you use your own internet and power.
- Any depreciable items you will need to keep receipts that should be in your name
- If your employer provides or reimburses you for office furniture, you cannot claim a deduction
- If you also use these items for non-work use (e.g. laptop for gaming, paying personal bills etc) you need to apportion your work related claim
- To do this you will need to keep a record of personal vs work related use for a 4 week period.
Failure to maintain records will mean that if audited the ATO will decline any working from home claim. You may then be able to claim under the ‘actual costs’ method, however there is significantly more onerous record keeping requirements for that method.
How we can help
We have developed a worksheet for you to use to ensure you are keeping the required records. If we are your tax agent, we will expect you to provide the required records to us when we prepare your tax return.
Download our 2023 Working From Home Tax Record Spreadsheet here.
