The new work-from-home tax rules explained

- February 24, 2023 2 MIN READ
Tax rules for work-from-home are changing 2023

The ATO has adjusted how you can claim your work-from-home tax costs.

While most of the COVID health restrictions have now been lifted, a lot of businesses are still operating a hybrid work place where staff have the flexibility to work from home on a regular basis.

As a result, the Australian Tax Office has adjusted its pandemic work-from-home-cost tax deductions.

Taxpayers can choose one of two methods to claim working from home deductions: either the “actual cost” or the “fixed rate” method. Only the fixed rate method is changing.

The revised fixed rate method

The revised fixed rate method applies from 1 July 2022 and can be used when taxpayers are working out deductions for their 2022-23 income tax returns.

To claim your working from home expenses, you must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls. Also, you must incur additional expenses as a result of working from home.

No matter which method you use, make sure to keep records.

The cents per work hour rate which can deducted has increased from 52 cents to 67 cents and 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.

Decline in asset value

You can separately claim the decline in value of assets used while working from home, such as computers and office furniture, the repairs and maintenance of these assets, as well as the costs associated with cleaning a dedicated home office.

Taxpayers need to keep a record of all the hours worked from home for the entire income year (the ATO won’t accept estimates) or a 4-week representative diary or similar document under this method from 1 March 2023.

Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.

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

The actual cost method

The other alternative is the actual cost method where you just write off actual costs incurred rather than a standard per hour deduction. This means keeping all receipts, bills and other similar documents to show you have incurred the expenses, 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).

Just remember you can’t claim a deduction for expenses which have already been reimbursed by your employer.

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