From 1 July 2022, the Australian Taxation Office (ATO) advised that a taxpayer can calculate and claim a tax deduction for working from home expenses by either of two methods.
The simplest method is the revised fixed rate method. To use this method, you must;
- be working from home while carrying out your employment duties or carrying on your business,
- you must incur specific additional office expenses as a result of working from home, including;
- energy expenses, such as electricity and/or gas for lighting, heating, cooling, electronic devices while working from home,
- internet expenses,
- mobile and/or home telephone expenses, and
- computer consumables and stationery.
- You must retain records of how you calculated the hours you worked from home and the additional running expenses. From 1 July 2022 to 28 February 2023, the ATO will accept a record representing the total hours worked from home (for example, a 4-week diary). From 1 March 2023 onwards, taxpayers must record their work hours from home.
- You cannot claim for things like coffee, tea, milk, and other general household items, even if your employer may provide these kinds of things for you at work.
This revised fixed rate method entitles you to claim a tax deduction of 67 cents per hour. You do not need a separate home office or a dedicated work area to be eligible for this revised set rate method.
In addition to this revised fixed rate, you can claim a tax deduction for depreciation on assets used while working from home (e.g. computer desk, office chair, storage unit etc.). You can also claim repairs to these assets.
Where both you and your spouse are working from home at the same time, you are each permitted to apply this fixed rate method, assuming you both meet the conditions mentioned above.
The second method is the ‘actual method.’ This is where you collate all your home office expenses and claim a percentage of the relevant invoices or receipts on an apportionment basis. A common apportionment method where the taxpayer is utilising a separate home office is multiplying the total energy bill by the percentage of floor space the home office represents by the total floor area of the home.
Should you require further information in relation to working-from-home tax deductions, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation-free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.