Many of us would have used the fixed rate, or ‘cents per hour’ method, for claiming a tax deduction for working from home in the past. It is simple to understand, requires fairly low substantiation, and most importantly is quick to work out.
Please be mindful that the Tax Office have now made some key changes to the fixed rate method for the 2023 financial year. Here is a quick summary of the main points:
- The 80 cents per hour ‘shortcut’ rate has been abolished
- The 52 cents per hour rate is being replaced with a higher 67 cents per hour rate
- The new 67 cents per hour rate covers the following expenses:
- Electricity and Gas
- Phone and internet usage
- Computer consumables
- Stationery
- Taxpayers will also be able to claim depreciation on things like office furniture and technology in addition to the 67 cents per hour rate claim.
However, the ATO are also introducing stricter record keeping requirements for taxpayers using the new rate method, as follows:
- From 1 July 2022 to 28 February 2023, taxpayers are required to keep a record which is representative of the hours they worked from home (much the same as previous years).
- From 1 March 2023 to 30 June 2023, taxpayers are required to record the total number of hours they worked from home (such as in a timesheet or diary for example) as well as evidence they paid for each of the expenses they incurred that are covered by the fixed rate method (for example, a phone or electricity bill). You will also need records for any equipment you bought to work from home, such as office equipment and furniture (ie. the invoice).
So please be prepared when it comes to tax time for 2023 that you have the appropriate records in place to claim the new 67 cents per hour working from home rate.
As usual, if you have any further queries regarding the above, please do not hesitate to contact your usual hmh advisor on +61 3 9840 2200.