On Thursday 3 November 2022, the ATO announced draft changes to the work from home expense claim methods.
The draft Practical Compliance guideline (PCG) released, outlines a new method called the revised fixed rate method for claiming a deduction for working from home expenses in 2022-23.
The Changes Summarized
- A NEW $0.67 cent fixed rate method has been introduced with significant changes to what you can and cannot claim as well as extra record keeping requirements.
- The existing $0.52 cent fixed rate method has been revised and will not be available for use in 2022-23.
- Shortcut method of $0.80 cent per hour has ended (i.e., it cannot be used to calculate a deduction for 2022-23). This means that the existing fixed rate deduction method has been revised.
Revised Fixed Rate Method
More specifically the revised fixed rate method provides a $0.67 cent deduction for each hour worked from home.
This rate per hour covers expenses included in the revised fixed rate:
- Data and internet
- Mobile and home phone usage
- Electricity and gas
- Computer consumables (printer ink)
- Stationery
What is very important to note, is that you will not be eligible to claim a separate deduction for any expenses included in the revised fixed rate method.
However, you can claim a separate deduction for:
- The decline in value of assets used while working from home, such as technology and office furniture, as well as any repairs and maintenance of these items
- Other working expenses you incur because of working from home which are not covered by the rate per hour
- Cleaning (only if you have a dedicated home office)
Actual Cost Method
The actual cost method allows you to claim a deduction for the actual expenses you incur as a result of working from home.
You may be able to claim a deduction for each of the expenses you incur, such as:
- Data and internet
- Mobile and home phone usage
- Electricity and gas
- Computer consumables (printer ink)
- Stationery
- The decline in value of assets used while working from home, such as computers and office furniture, as well as any maintenance and repairs of these items
- Cleaning (only if you have a dedicated home office)
The actual cost method requires detailed calculations and records. For example, you will need to know and have records of the cost
The Records Needed for this Change
Additional record keeping and evidence requirements have been set down by the ATO for those who wish to use this new method.
Revised Fixed Rate Method
To claim working from home expenses using the revised fixed rate method, you will need the following records:
- A record of all the hours you work from home for the entire year (timesheet, roster, diary). Note that for 2022-23 a transitional timekeeping arrangement is available.
- Evidence you paid for the expenses covered by the revised fixed rate method (for example, if you use your phone and electricity when you work from home, keep one bill for each of these expenses).
You will also need records for items you claim as a separate deduction.
Actual Cost Method
You will need to keep a record for every expense you claim.
Running expenses
You need the following evidence to show you incur additional running expenses:
- Receipts, bills or invoices which show the supplier, amount of the expense, nature of the goods, date it was paid and the date of the document
- Evidence of your personal and work-related use of the items or services you buy and use.
You can work out your work-related expenses using records for the entire year or over a 4 week period that represents your work use – for example, using a diary or itemized bill.