ATO changes the working from home game!

The Tax Office has made an important change to how you can claim tax deductions for expenses incurred when working from home.

You can always claim the actual expenses of working from home. This article is not about this way of making a claim. This is about a new Tax Office approved method that cuts down on the paperwork.

The ATO has released a draft “practice compliance guideline” that has announced the former 80 cents per hour method (introduced during COVID-19) and the former 52 cents per hour “fixed-rate method” are abolished from 1 July 2022. These will be replaced by a “revised fixed-rate method” of 67 cents per hour.

One of the positives things about the new method is that you do not need to have a workspace at your home that is dedicated to your employment or income producing activity. You did need to have such a workspace to use the former 52 cents per hour method.

The new method applies now. From 1 January 2023 you need to keep actual records of the number of hours you have worked at home. The Tax Office has made it clear that estimates of the time spent working at home will not be acceptable.

The 67-cent method only covers 4 items - internet, energy, telephone and stationery and consumables. Any expenses other than the four items just mentioned need to be claimed under normal tax principles. This may mean an apportionment of the expense between private and income producing use.

For many people, using the 67 cents per hour rate may not produce the largest tax deduction. Often the largest tax deduction will result from using the actual expenses method.

The actual expenses method requires you to keep all of your receipts and invoices and to have a supportable method of apportioning these expenses between private and income producing use.

Contact support@minimalaccountant.com.au today for any assistance you may need.

This is general advice only and does not consider your specific financial circumstances. You should seek tax advice from a qualified accountant before making any decision based on this document.