There has been an increase in working from home since the COVID-19 pandemic, and the ATO has recently updated its guidance on claiming work from home expenses. The 80 cents per hour COVID shortcut method ended on 30 June 2022.
As in previous years, from 1 July 2022 to 28 February 2023 the ATO will accept an indicative record which represents the total number of hours worked from home (for example a 4 week diary or calendar entries). The ATO has announced that from 1 March 2023, it will no longer be possible to claim home office expenses based on indicative hours worked from home over the year, full records of the number of actual hours you work from home during the entire income year will be required.
From 1 March 2023, there will be two options for claiming work-related expenses while working from home:
Under the shortcut method, from 1 March 2023, you must keep:
You must keep records for depreciating assets from the time you buy them, that shows
You must also keep these records for other running expenses you are claiming as a separate deduction.
The actual cost method requires detailed calculations and records. Under this method you must keep:
We advise you to review these requirements carefully and ensure that you are keeping accurate records of your hours worked and any relevant expenses. If your records are incomplete, you may not be able to claim for your work from home costs. If your claims are inaccurate, you may be subject to penalties and interest charges.
Please see the ATO’s Tax Time release summarising work from home deductions for more information.
We understand that these changes may be confusing, and we are here to help you in any way we can. If you have any questions or require further clarification, please do not hesitate to contact us.
As in previous years, from 1 July 2022 to 28 February 2023 the ATO will accept an indicative record which represents the total number of hours worked from home (for example a 4 week diary or calendar entries). The ATO has announced that from 1 March 2023, it will no longer be possible to claim home office expenses based on indicative hours worked from home over the year, full records of the number of actual hours you work from home during the entire income year will be required.
From 1 March 2023, there will be two options for claiming work-related expenses while working from home:
- Shortcut method - This method will continue to be available, but the rate will change to 67 cents per hour worked from home and the record keeping requirements have changed. This revised fixed rate of 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. Depreciation and repairs of assets can be claimed in addition. A dedicated home office is no longer required, meaning this rate can now be claimed no matter where you work from in the home.
- Actual cost method - This method has not changed, and requires you to keep detailed records of all expenses incurred while working from home, such as electricity, phone and internet expenses, and decline in value of furniture and equipment used for work purposes. You will also need to keep a record of the hours worked from home, and the floor space of your dedicated home office.
Under the shortcut method, from 1 March 2023, you must keep:
- a record of the number of actual hours you work from home during the entire income year – for example, a timesheet, roster, diary or other similar document. We have a spreadsheet template for your convenience. If you would like a copy, please contact us.
- at least one record for each of the additional running expenses you incur that the rate per work hour includes – for example, if you incurred electricity and stationery expenses, keep one quarterly bill for your electricity expenses and one receipt for your stationery expenses.
You must keep records for depreciating assets from the time you buy them, that shows
- the amount spent on depreciating assets you buy
- the percentage of the year you use your depreciating assets exclusively for work, such as a diary or similar document.
You must also keep these records for other running expenses you are claiming as a separate deduction.
The actual cost method requires detailed calculations and records. Under this method you must keep:
- records of all expenses incurred in working from home, including:
- Number of hours worked from home during the year (full year or 4 week representative period)
- Electricity and gas bills
- Phone and internet bills
- Stationery and office equipment receipts
- Repair and maintenance receipts
- Cleaning receipts
- the cost per unit of electricity and gas
- average units you use per hour, which is the power consumption per kilowatt hour for each appliance, equipment or light used in the home office
- evidence of the proportion of deductible use of phone and internet for the whole year, such as 'itemised' supplier records which have your work-use proportion for the applicable period marked on each record, or;
- if your work-use proportion is constant throughout the year, records showing your detailed usage pattern over a representative period (if one exists). For example, a 'diary' record of use over a representative 4-week period can be accepted
We advise you to review these requirements carefully and ensure that you are keeping accurate records of your hours worked and any relevant expenses. If your records are incomplete, you may not be able to claim for your work from home costs. If your claims are inaccurate, you may be subject to penalties and interest charges.
Please see the ATO’s Tax Time release summarising work from home deductions for more information.
We understand that these changes may be confusing, and we are here to help you in any way we can. If you have any questions or require further clarification, please do not hesitate to contact us.