The ATO has released new guidelines on how to claim Working From Home (WFH) expenses,
To claim for the deductions for home office running expenses, in general:
The taxpayer must incur the expense, not be reimbursed.
There must be a real connection between the use of the home office and the taxpayer’s income producing work.
This new guidance replaces the previous “fixed rate” and “short-cut”, while incorporating elements from them both. Taxpayers will need to keep a record for the entire year (see details below). The new rate is set at 67 cents per hour worked (based on ABS household expenditure data), this new rate is intended to cover:
Energy expenses for lighting, heating/cooling, electronic items used while working from home
Internet expenses
Mobile and or home telephone expenses*
Stationery and computer consumables
*Unfortunately, this means that no additional claim can be made for a mobile phone even if the use outside of the home may be substantial.
What is excluded from the new rate (and can be claimed separately by taxpayers):
Decline in value of depreciating assets (equipment such as computer, desks, chairs)
There will be no requirement for a separate home office, however to qualify the work needs to be substantive and directly related to income producing activity – minor tasks such as taking phone calls and checking emails do not qualify.
Importantly, record keeping, and retention requirements have been increased, taxpayers must keep:
Records showing the total number of hours worked from home during the year.
One document such as and invoice/bill or credit card statement for each of the additional running expenses which they have incurred during the income year. If the bill is not in the taxpayers name additional evidence is required to prove the taxpayer incurred the expenditure
Taxpayers will no longer be able to use a four-week diary to claim their hours – they will need to keep a record for the entire year – this can be based off existing records such as time sheets or rosters. As this guideline was released part way through the 2023 income year, as a one-off concession tax payers must keep:
A record which is representative of the total hours worked from home during the 1 July – 31 December 2022 period, and
Actual records from 1 January – 30 June 2023.
With these changes, many taxpayers may feel that they are short-changed by the 67c rate and elect to claim under the actual expenses method, which carries more onerous recording requirements.
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