Work-from-home tax deductions have changed. Here's everything Australians need to know

Many Australian employers continue to allow employees to work-from-home post COVID-19 restrictions and lockdowns.

Australian taxpayers can not claim tax deductions for costs related to their children's education such as iPads, desks and subscriptions for online learning. (Representative image). Credit: MoMo Productions/Getty Images

Key Points

• Taxpayers can now claim 67 cents for per work hour from home
• From 1 March 2023, taxpayers must record work-from-home hours in forms such as timesheets, rosters and logs
• ATO will not accept estimates or a four-week representative diary as a record of hours worked from home

Australian taxpayers can claim tax deductions for costs they incur while working from home.

These deductions can be claimed either using the 'actual cost' or 'fixed rate'.

The Australian Taxation Office (ATO) has now revised the fixed rate method.

Eligibility

Assistant Commissioner Tim Loh. Credit: ATO/lightbulb studio

ATO's Assistant Commissioner Tim Loh said taxpayers should check their eligibility before claiming work-from-home expenses.

To claim your working from home expenses, you must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls

Assistant Commissioner Tim Loh

"Also, you must incur additional expenses as a result of working from home."

The additional expenses may include electricity or gas (energy expenses) for heating or cooling and lighting, home and mobile internet or data expenses, mobile and home phone expenses, stationery and office supplies.

"Other expenses include the decline in value of depreciating assets used for work like chairs and desks, equipment such as computers, laptops and software and the repairs and maintenance of depreciating assets," the ATO told SBS.

Employees must keep a record of all additional expenses.

However, they can't claim a deduction for coffee, tea, general household items, costs related to their children's education such as iPads, desks and subscriptions for online learning, and items employers provide.

Changes

Taxpayers can now claim 67 cents per work hour under the revised fixed cost method. Earlier, it was 52 cents per work hour.

Nayan Patel, a certified practising accountant, said employees are no longer required to maintain a dedicated home office space under the revised method.

"The revised fixed rate of 67 cents per work hour covers additional expenses such as electricity, gas, phone usage, internet, stationery and computer consumables," Mr Patel said.

"Assets and equipment that typically give taxpayers a bigger deduction, such as technological items and office furniture, however, are not included in the revised rate and need to be claimed separately," he added.

The revised changes apply from 1 July 2022, and taxpayers can use this method for their next or the 2022-23 income tax return.

Record keeping

The ATO said it will not accept estimates, a four-week representative diary, or similar documents under the revised fixed cost method from 1 March 2023.

Employees must record hours in forms such as time-sheets, rosters, logs of time spent accessing employer or business systems, or a diary for the whole year.

Mr Loh said transitional arrangements are in place for 2022-23 for those taxpayers who haven't kept records this income year.

From 1 July 2022 to 28 February 2023, we'll accept a record representing the total number of hours worked from home (for example, a four-week diary)

Assistant Commissioner Tim Loh

Actual cost method

The ATO said the actual cost method remains unchanged.

It said employees must keep records if they intend to use this method for claiming the actual work-related portion of all running expenses.

Records include all receipts, bills and documents showing the number of hours worked from home during the income year (either the actual hours or a diary or document kept for a representative four-week period to show the usual pattern of working at home).

The ATO said employees must maintain a record of how they calculated the work-related and private portion of their expenses.

They can't claim a deduction for expenses already paid or reimbursed by the employers.

The ATO said employees can't immediately claim the full amount of an asset that costs more than $300, irrespective of the method used.

The deduction must be claimed as depreciation over a number of years, it said.

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