There have been some new working from home deduction changes for 2022/23 and so the following is a summary of those changes.
The pandemic has changed the way we work, with many people in Australia and around the world now working remotely from home. This has led to changes in tax deductions for expenses incurred while working from home.
The proposed changes to the working from home fixed rate method has now been finalised and the ATO’s Practical Compliance Guide 2023/1 is now available.
From the 2022/23 income year, the methods available to assist in calculating the work from home deductions include a revised fixed rate method and an actual cost method.
The revised fixed rate method is an alternative method for calculating home office expenses. The revised fix rate method has been updated to make calculating expenses easier and avoid any time-consuming apportionment calculations. Therefore, creating better contemporary arrangements when working from home.
Under this method, taxpayers can now claim an increased fixed rate of 67 cents per hour for home office expenses, regardless of the actual amount spent. The fixed rate calculates the claim for expenses such as electricity and gas. Individuals will no longer need to have a dedicated workspace, such as a home office, that is used exclusively for work purposes during the tax year.
To claim the fixed rate method you must keep records of the hours worked from home, such as timesheets or diary entries.
This also includes the evidence of all paid expenses you have incurred that are covered by the fixed rate method (such as phone or electricity bills). You must also have record of all the equipment you had bought in order to work from home, such as technology and/or furniture, which must also require the supplier, cost and date acquired.
Taxpayers still have the option to use the actual cost method of claiming other work-related expenses as opposed to using the revised fixed rate method.
For more information about these measures click here.