The Australian Taxation Office (ATO) has recently released new guidelines on claiming home office expenses, effective 1 July 2022. This latest update from the ATO is an important one for anyone who works from home, as it may help to reduce the amount of tax they are required to pay. In this blog post, we’ll explain the changes made to the ATO’s home office expenses guidelines and provide a few tips to help you understand them better.
The basics of the ATO’s new guidelines.
The ATO has introduced the revised fixed-rate method which replaces the previous short-cut method and fixed-rate method. Under the new revised fixed-rate method, an eligible taxpayer can claim 67 cents for each hour they are genuinely working from home.
Individuals can choose to use the actual expenses method instead, which has not changed. The actual expenses method covers a portion of those running expenses that are not covered by the fixed-rate method, eg office equipment, depreciation and cleaning costs. You may only use this method if you have a dedicated home office space, and it is a good idea to have your tax agent analyse and apportion these expenses.
What expenses can be claimed under the new fixed-rate method guidelines?
• Energy expenses – electricity and gas
• Internet expenses
• Mobile and home telephone expenses
• Stationery and computer consumables
Note: Telephone and internet expenses were previously claimed as separate expenses. As of 1 July 2022, they can be claimed under the revised fixed-rate method.
What records do you need to keep?
From 1 July 2022 to 28 February 2023 – A record of the number of hours worked from home over a 4-week period. This can then be used to estimate the total number of hours worked for the entire period.
From 1 March 2023 – A record of the total amount of actual hours worked from home.
You will also need to keep copies of receipts or invoices of all expenses to verify the claim
Important things to keep in mind when claiming home office expenses.
Remember, these new revised fixed-rate guidelines are for home office running expenses. If you would like to claim home office occupancy expenses such as rent, mortgage and rates, it’s a good idea to discuss with your tax agent as claiming these may generate a CGT event.
To be eligible to claim working from home expenses you must be working from home to fulfil your employment duties. This does not include such tasks as occasionally checking emails or making phone calls.
Record keeping can be daunting, that’s why we have included a link to our home office diary for you to save to your computer and provide to your Accountant at tax time. Another great tool for record
keeping is an app called ReceiptHub. This app allows you to take a photo of your receipt and categorise it for tax time.
Happy record keeping!