A revision to claiming working from home related expenses is currently being drafted by the ATO to come into effect from the 2022-23 income year onwards.
From 1 July 2022 the shortcut method is no longer available (brought in as a COVID-19 working from home measure).
You will now only be able to claim actual expenses (apportioned as necessary), or the revised fixed rate method.
These changes will apply to:
· Employees that carry out employment duties working from home (does not include minimal duties i.e. occasionally checking emails)
· Where the expense is incurred in carrying on a business to produce or gain assessable income
You must be incurring additional running expenses as a result of working from home and also keep relevant records of time spent working from home and the expenses incurred. Taxation Ruling TR 93/30 explains deductible working from home expenses. These include:
· electricity
· internet expenses
· phone (mobile and/or landline) expenses
· decline in value of office furniture or equipment
It does not include general goods such as milk, coffee, tea, etc.
Not incurring additional costs – no deduction allowed
An example provided by the ATO is where an employee works from home 2 days per week. They live with their parents, use an employer provided laptop, don’t contribute to household bills or pay any rent. In this case the employee has not incurred any additional running costs as they don’t pay for any costs.
Revised Fixed Rate Method
This is a new rate of 67c per hour to cover the following incurred additional running expenses as a result of working from home and is based on actual hours you worked from home during the tax year:
· electricity
· stationery & computer consumables
· internet expenses
· phone (mobile and/or landline) expenses
Using this method means that you cannot then claim a separate deduction for these items individually.
This method does allow you to claim the work related depreciation on assets used to work from home during the tax year (you must still remove any private use).
**THE ATO HAVE ADVISED WILL DENY CLAIMS UNDER THIS METHOD WHERE AN ESTIAMTE OF HOURS IS USED – IT MUST BE ACTUAL RECORDED HOURS**
Other important notes:
· You cannot claim for items where your employer has reimbursed you for the cost
· Items such as laptops and phones provided by your employer cannot be claimed for depreciation The ATO have an app that can assist with your record keeping requirements. CLICK HERE to find out more about the app.
Actual Expense Method
This method continues to remain the same as under the previous rules. If you would like to review the record keeping requirements for this method, please click the link below to take you the ATO page outlining how you calculate your expenses and some worked examples. Using the ATO Actual Expense Method a link to the ATO.
SAMANTHA RASMUSSEN
ACCOUNTING SERVICES AND BUSINESS ADVISORY
