Changes to work from home deductions from 1 March, 2023

Starting today, the Australian Taxation Office (ATO) has implemented important changes to the way taxpayers claim costs incurred when working from home.

The changes will help reflect a more precise way of logging working from home activities and arrangements.

Currently, there are two options for claiming work from home deductions, these being the ‘actual cost’ or the ‘fixed rate’ methods. The changes announced by the ATO primarily effect the ‘fixed rate’ option.

The main change to the ‘fixed rate’ method is an increase of hourly rate that taxpayers can claim. As of March 1, the previous 52 cents per hour is increasing to 67 cents per hour.

The revised fixed rate will also cover deductions for:

  • Electricity and/or gas for lighting, cooling, and heating.
  • Home and mobile phone usage.
  • Home and mobile internet or data.
  • Computer or stationery goods (e.g., printer ink and paper).
  • Office furniture.

In addition to the ‘fixed rate’ change, the ATO now requires taxpayers to keep a more detailed record of the hours spent working at home.

For every expense incurred taxpayers are now required to keep detailed records including receipts or bills. The previous four-week diary and estimates will no longer be accepted. Instead, taxpayers will need to keep a record of the total number of hours worked from home for the duration of an entire financial year.

Despite stricter changes by the ATO, particularly around record keeping, they have allowed a grace period ‘from 1 July 2022 to 28 February 2023’ where they will accept a record keeping representation like the four-week diary.

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