Revised Fixed Rate Method:
The revised fixed rate method offers a simplified way to calculate working from home deductions. The key features of this method are as follows:
- Increased Hourly Rate: The rate has been increased from 52 cents to 67 cents per hour worked from home. This higher rate better reflects current work-from-home arrangements.
- No Dedicated Home Office Space Requirement: Taxpayers are no longer required to have a dedicated home office space to claim deductions using the fixed rate method. This change recognizes that many people now work from various areas within their homes.
- Covered Expenses: The revised fixed rate method allows taxpayers to claim deductions for various expenses, including electricity and gas, phone and internet usage, computer consumables, and stationery. Additionally, taxpayers can separately claim the work-related portion of the decline in value of assets like office furniture and technology.
- Home-Based Businesses: The revised fixed rate method can also be used by businesses operating from home to claim home-based business expenses.
Actual cost method:
To use the revised fixed rate method for the 2022–23 tax return, taxpayers must maintain specific records, depending on the time period:
- From 1 July 2022 to 28 February 2023: Taxpayers should keep records that represent the hours they worked from home during this period.
- From 1 March 2023 to 30 June 2023: Taxpayers need to maintain records of the total number of hours they worked from home (e.g., timesheets, rosters, or diaries). They should also retain evidence of expenses covered by the fixed rate method, such as phone or electricity bills. Additionally, taxpayers should keep records of any equipment purchased for working from home, including details of the supplier, cost, and date of acquisition.
The updated methods for calculating working from home deductions provide individuals with simpler options to claim their home office expenses. The revised fixed rate method eliminates the need for complex calculations and allows taxpayers to claim a higher rate per hour worked from home. It is essential to maintain accurate records of hours worked and relevant expense documentation to support the deductions claimed. By understanding the changes and meeting the record-keeping requirements, individuals can confidently claim their working from home deductions in accordance with the updated guidelines.
Reference: ATO Working from home deduction changes for 2022–23
