The ATO has made changes to the way that working from home deductions can be claimed by eligible taxpayers for the 2023 income year. The changes largely relate to the records to be maintained.
If you have genuinely worked from home at any time from 1 July 2022 to 30 June 2023, you may be eligible to use the ATO’s revised fixed-rate (67 cents per hour) method to claim for:
· energy expenses (i.e., electricity and gas) for lighting, heating/cooling, and to run electronic items used for work or business;
· internet expenses;
· mobile and home telephone expenses; and
· stationery and computer consumables (e.g., printing paper and printer cartridges).
Under the revised fixed-rate method, a claim for the above running expenses is calculated at a fixed rate of 67 cents for each hour that you worked from home during the 2023 income year.
This is an alternative method to claiming for the above running expenses using the actual expenses method, which would require a separate claim for the work/business portion of each expense.
What records do you need to keep when using the ATO’s revised fixed-rate method?
You will need to keep some receipts, bills or invoices of the running expenses you have incurred in order to verify your claim (say one bill per expense per year).
You will also need to keep a record (e.g., a timesheet, diary or similar record) of the number of hours you worked from home during the year, basically as follows:
· From 1 July 2022 to 28 February 2023 – The ATO will generally accept a record of the number of hours worked from home over a representative period (e.g., a diary for a four-week period). This can then be used to estimate the total number of hours worked for this entire period.
· From 1 March 2023 – You need to keep a record of the total number of actual hours worked from home. This effectively means that you will need to make a record (e.g., a diary entry) of the number of hours worked from home on each occasion that you worked from home.
If you are resident for tax purposes in Australia and claim working from home deductions usually against your employment income or wish to claim then this will apply to you and is just a change in record keeping from 01 March 2023 not for the prior 2022 tax year.
If you are non-resident for Australian tax purposes this does not apply to you unless you have a HECs debt. If you have a HECs debt then you generally complete a tax return to report your worldwide income. There are three methods of reporting and under the third ‘comprehensive tax-based assessment method’ we report your income and claim deductions as if you were working in Australia. In this case you should keep a diary of the hours worked from home from 01 March 2023.