NEW WORK FROM HOME DEDUCTION RULES
From 1 July 2022, there are only two ways to claim deductions for ‘working from home’ expenses: the ‘fixed rate method’ or the ‘actual cost method’.
Three essential criteria:
- the work must involve carrying on substantive employment duties or in carrying on business. Occasionally checking emails is not sufficient to meet this condition.
- the taxpayer must have incurred deductible additional running expenses of a kind outlined below.
- the taxpayer must meet the STRICT RECORD KEEPING requirement. The importance of actual records will be crucial – taxpayers cannot rely on estimations.
Method 1: Fixed Rate Method (from 2023 FY):
The ATO accepts the claim amount being 67 cents per hour working from home.
You should keep written records (diary or float chart) to record all of the work from home hours.
The fixed rate method covers the following expenses:
- data and internet
- mobile and home phone usage
- electricity and gas
- computer consumables (e.g. printer ink)
- stationery.
That means, you can’t claim a separate deduction for any of the expenses the revised fixed rate includes.
What you can still claim separately:
- the decline in value of assets used while working from home, such as computers and office furniture
- the repairs and maintenance of these assets,
- cleaning (only if you have a dedicated home office).
Method 2: Actual Cost Method:
If you have an “exclusive area for your work”, you may use the exact expense ratios to claim percentages of the running costs such as: home office equipment, computers, printers and telephones, heating, cooling and lighting; the costs of repairs to your home office furniture and fittings and portion of cleaning expenses. Employees cannot claim rent or mortgage repayments.
