The ATO recently released updated guidance on the methods to use when calculating Working from Home (WFH) deductions. These new rules apply from 1 July 2022.
The updated options are:
- Revised fixed rate method
- Actual costs method
The previously available Short cut (80c per hour) method is no longer available for use from 1 July 2022.
The actual costs method has not changed but there have been important changes to the fixed rate method that we wanted to highlight for you:
- The hourly rate has been increased to 67c per hour, up from 52c per hour.
- There is no longer a need to have a dedicated office to work from home in.
- You will be required to keep a log of actual hours worked, estimates will no longer be accepted. Actual hours worked can be tracked using a diary or timesheets. There are transitional arrangements for the 2022/23 financial year:
- From 1 July 2022 – 28 February 2023 you can use a four week summary to estimate your actual hours working from home for the period
- From 1 March 2023 to 30 June 2023 you will be required to keep a log of actual hours worked, estimates will no longer be accepted.
- The updated expenses covered under the hourly rate are:
- Energy
- Phone & Internet
- Computer Expenses
- Stationery
- Any depreciation of assets, repairs and maintenance of assets or cleaning of your home office work space needs to be claimed separately and is not covered in the 67c per hour rate.
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.
You must keep records to show you incur expenses as a result of working from home. The type of records you need to keep will depend on the method you choose to calculate your expenses.
We suggest you start recording your working from home hours so you have the information available when it comes time to prepare your 2023 tax returns.
Should you have any queries or require further assistance please contact our office on 8418 2111.