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Changes to Working From Home Tax Deductions

5.9 min read


What's the latest update on claiming working from home expenses? 

The Australian Taxation Office (ATO) have changed the way that taxpayers claim deductions for costs incurred when working from home

If you work from home, it’s important you read on as it will affect how the deduction is calculated on your next tax return.
 

Revised fixed rate method 

The revised fixed rate method applies from 1 July 2022 onwards. The amount of the fixed rate is $0.67 cents per hour.  
 

What’s covered by the rate

The revised fixed rate of $0.67 cents per work hour covers:
  • Energy expenses (electricity and gas)
  • Phone usage (mobile and home)
  • Internet
  • Stationery and computer consumables
No additional deduction for any expenses covered by the rate can be claimed if you use this method. 

Note that phone usage and internet expenses are included in the fixed rate method. Under the new rules, if you use your mobile phone for work purposes when you are out-and-about, as well as at home, you can no longer claim a separate deduction for this use and still use the fixed rate method. If you wish to claim actual use of your mobile phone (or home internet), you must claim using the actual method for all working from home expenses (see below).
 

What can be claimed 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.
  • The costs associated with cleaning a dedicated home office. 

Home office 

The revised fixed rate method doesn’t require that you have a dedicated home office space to claim working from home expenses. So, if you work from the kitchen or living room, you can still claim a deduction.


Compliance and substantiation

You need to keep a record of all the hours worked from home for the entire income year. 

The ATO won’t accept estimates, such as  a 4-week representative diary or similar document. 

Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, or a dairy for the full year. 

Records must be kept for each expense that you have incurred which is covered by the fixed rate per hour (for example, if you use your phone and electricity when working from home, you must keep one bill for each of these expenses).
 

Actual cost method 

You can claim the actual work-related portion of all running expenses. To claim this method, you must have an area set aside as a dedicated home office.

Compliance obligations include keeping detailed records for all the working from home expenses being claimed, including: 
  • All receipts, bills and other similar documents to show you have incurred the expenses and a record of the number of hours worked from home during the income year (either the actual hours or a diary or similar document kept for a representative 4-week period to show the usual pattern of working at home). 
  • A record of how you have calculated the work-related and private portion of the expenses. 
If you are claiming your working from home expenses, you can’t claim a deduction for expenses which have already been reimbursed by your employer.

We understand that many of you will have further questions about these changes and how they may affect your tax return and record keeping requirements. We have trained all our H&R Block Tax Experts on the rules. Find an office near you and book an appointment online today or call us on 13 23 25. 


Still have questions? We have the answers

Rate per hour covers expenses which are included in the revised fixed rate, which provides a $0.67 cent deduction for each hour worked from home. 

You can claim a separate deduction for decline in value of assets and other working expenses you incur. 

You can’t claim a separate deduction for any expenses included in the revised fixed rate method. 

To claim working from home expenses using the revised fixed rate method, you will need records of all the hours you worked and evidence you paid for the expenses. 

ReceiptHub can help with receipt capture and storage of monthly and quarterly bills. Manage and organise your receipts throughout the year and send with ease to your tax agent when Tax Time comes. Download and sign-up now for free.

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