During COVID many employees changed their working conditions to work from home where possible.  Due to the flexibility and other lifestyle advantages this afforded employees and employers, many of these arrangements have continued post pandemic. 

The ATO were very generous and quick to change the working from home expenses allowed to be claimed.  Essentially there were three methods of claiming working from home, and it was up to the taxpayer which method they used (ultimately the method that produced the higher tax deduction).

The ATO have recently announced they have changed the way taxpayers claim their working from home expenses for FY23 and beyond.  There are now just two methods to claim – either “actual cost” or “fixed rate” methods. The revised fixed rate applies from 1 July 2022 (i.e. the FY23 tax return).

The ATO has always stressed the need to keep records, and for the individual, this accuracy allows for flexibility in choosing the method that produces the highest tax deduction depending on your circumstances.

To accommodate this change, from 1 July 2022 to 28 February 2023, the ATO will accept a four week diary to calculate average hours over the nine months.  From 1 March 2023 onwards however, taxpayers need to record the total number of hours they work from home (cannot use averages, but can use timesheets, rosters, log books, diary).

Fixed rate method

The revised fixed rate claimable amount has increased from 52c/hr to 67c/hr. This rate per hour covers energy cost, phone usage (mobile and home phone), internet, stationery and computer consumables.  You cannot claim any additional deduction for expenses covered by this rate. However you can claim a separate deduction for decline in value of assets used while working from home.

Actual cost method

This method has not changed.  This means taxpayers can still claim a portion of their actual home office running expenses, including phone, internet, electricity, gas.  This requires an actual “home office” space and is claimed based on the size of this room compared to the rest of the house.

Key takeaways:

Keep good records of the number of hours spent working from home. 

Keep all receipts for electricity, gas, phone, internet, stationery etc.

Talk to your accountant and make sure you’re maximizing your working from home deduction and claiming the correct amount in your tax return.