In another sign that the COVID-19 era is drawing to a close, the ATO has just released a new guidance for claiming working from home deductions, that will commence at the beginning of March.
The popular short-cut method of claiming 80 cents per hour for work hours spent at home will conclude on 28 February.
In its place will be a new way of claiming these work-related expenses, called the revised fixed rate method. In summary, the revised fixed rate method:
* will increase from 52 cents to 67 cents per hour worked from home
*removes the requirement to have a dedicate home office space
*works out the claim for
o electricity and gas
o phone and internet usage
o computer consumables
*allows you to separately claim the work-related portion of the decline in value of depreciating assets – such as office furniture and technology.
The revised fixed rate method can also be used by businesses that operate some or all of their business from home to claim home-based business expenses. If you plan to use the revised fixed rate method for your 2023 tax return, please note that you need to have:
*from 1 July 2022 to 28 February 2023 – a record which is
representative of the hours you worked from home
*from 1 March 2023 to 30 June 2023 – a record of the total number of hours you worked from home (such as a timesheet, roster or diary);
evidence you paid for each of the expenses incurred that are covered by the fixed rate method (for example, a phone or electricity bill); and records for any equipment bought to work from home, like technology or furniture (which provides details of the supplier, cost and date the items were acquired).
It should be noted that the requirement to prove you actually paid for home office phone and electricity bills will end the short cut method for taxpayers living with their parents and reduce claims by people who share housing by the number of people they live with.
Currently, two people who live in the same house and share their phone and utilities bills can both claim the short-cut method of 80 cents per hour without apportionment. This situation will come to an end on 28 February.
The ATO has not changed the rules concerning claiming home office expenses using the actual costs method, however this method is only available if you have a dedicated home office space. Dedicated meaning that your office space is a room with a door.