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Welcome back everyone. In the sixth and final part of my blog series, I want to discuss something that affects all of our financial journeys: Superannuation. Perhaps you’re concerned about your retirement savings? Or maybe uncertain about how to make the most .....
Tax - 5 min read
The Australian Taxation Office (ATO) has refreshed the way that taxpayers claim deductions for costs incurred when working from home. As described by Assistant Commissioner Tim Loh, these changes better reflect contemporary working-from-home arrangements.
The new revised fixed rate method supersedes both the original fixed rate method that had been in place since 2019 and the shortcut method introduced during the Covid-19 pandemic. This revised method has taken elements of both preceding methods and created a new hybrid method that boasts simplicity and flexibility for taxpayers.
Starting 1 July 2022, taxpayers can claim a revised fixed rate of 67 cents per work hour that covers energy expenses, phone usage, internet, stationery, and computer consumables. This is a slight departure from the original and shortcut methods that saw claims of 52 cents and 80 cents per work hour, respectively. These rates also covered the decline in value of assets such as computers and laptops in addition to the above expenses.
The new revised method also no longer requires you to have a dedicated home office space in order to claim work from home expenses, which means record keeping will be much simpler and straight forward for taxpayers.
To be eligible to claim the new revised method, you must incur additional running expenses such as electricity and internet usage as a result of working from home, have a record of the total number of hours worked from home, a record of expenses incurred while working from home that fall under the new method such as an electricity or internet bill, as well as the work-related portion of additional expenses not covered by the new method, such as assets purchased for the purpose of working from home, the cost of maintenance of these assets and costs associated with cleaning your dedicated office space.
One thing to note, from 1 March 2023 the ATO will not accept estimates under this new method, meaning you will need to be able to provide documentation of hours worked from home, such as a diary, roster, time-tracking app, or timesheet. From 1 July 2022 to 28 February 2023 a record which is representative of the hours worked will be acceptable.
You now have the ability to separately claim the decline in value of assets over $300 used while working from home, such as computers or office furniture and their maintenance in addition to claiming the new revised method. Additionally, you can also claim costs associated with cleaning your dedicated home office in addition to claiming the new revised method.
However, there are expenses you will not be able to claim, such as additional deductions for expenses already covered by the new revised method, coffee, tea, milk and other general household items, costs related to your children’s education, such as iPads and desks or subscriptions for online learning, items provided by your employer such as a laptop or mobile, or expenses where your employer reimburses you for the cost.
If you choose not to use the new revised method but would still like to claim deductions for working from home, you will need to use the actual cost method. This method has not changed and allows taxpayers to claim the actual work-related portion of all running expenses associated with working from home. This includes keeping detailed records for all working-from-home expenses being claimed, such as receipts and bills, a record of number of hours worked from home such as a diary, timesheet or roster, a record of how taxpayers have calculated the work-related and private portions of their expenses and be able to apportion certain deductions by the floor area of your dedicated work space.
The first step you need to take is to start keeping a record of the hours you have worked from home for the income year. The next step is to keep at least one record for each additional running expense incurred that falls under the new revised method. If you would like to claim a deduction on expenses not included in the new revised method, you will also need to keep records of these expenses. These records will need to be kept for 5 years from the date you lodge your tax return.
For more information about your eligibility to claim the new revised method and how much you can claim, please contact us.
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Altus Wealth Pty Limited ABN 55 649 956 212 is an Authorised Representative of Altus Financial Services Pty Ltd ABN 24 637 026 825 an Australian Financial Services Licensee (AFSL no. 520266). Altus Financial Services Pty Ltd is not responsible for the advice, products and services provided by Altus Accounting. Julie Azzi is a credit representative (CR No. 366834) of BLSSA Pty Ltd ABN 69 117 651 760 (Australian Credit Licence 391237).
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