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What’s changed?
The ATO stated that you always had to have a dedicated home office in order to claim any working from home expenses.
After 1 July 2022
Now the ATO have said that you no longer need a home office to claim deductions for working from home. Setting up the laptop on the kitchen table is now acceptable.
Fixed Rate method
This method involves using the hours actually worked from home to cover a variety of costs.
Pre 1 July 2022 – 52c/hour
The fixed rate covered:
- electricity & gas
- home office depreciation
- cleaning of the dedicated home office
In addition to this, you could also claim the work use portion of your:
- data & internet
- mobile & home phone usage
- computer consumables
- stationery
- depreciation of work related items such as computers
This was the method most accountants used, as it’s easier than calculating the home office electricity usage. You were required to keep a diary for 4 weeks of the year to prove how you came to your total hours.
After 1 July 2022 – 67c/hour
This method now includes:
- data & internet
- mobile & home phone usage
- electricity & gas
- computer consumables
- stationery
In addition to this you can claim:
- decline in assets such as computers and office furniture
- repairs and maintenance of said assets
- cleaning (if you have a dedicated office)
You are required, from 1 March 2023, to keep a diary all year to now substantiate the hours you claim.
Shortcut Method – 80c/hour
This was introduced in recognition of everyone working from home during COVID-19. It was available for use from March 2020 until 30 June 2022.
It covered everything! Which meant it wasn’t always the most tax effective – unless the boss was paying for your mobile phone bill and supplying your equipment and furniture.
- data & internet
- mobile & home phone usage
- electricity & gas
- computer consumables
- stationery
- decline in assets such as computers and office furniture
- repairs and maintenance of said assets
- cleaning (if you have a dedicated office)
Actual Method – always available
A lot more record keeping is required for this method – but it’s absolutely worth it.
This involves keeping a record of what actual hours you work from home. The ATO requires you keep a 4 week diary every year to substantiate your claim (they didn’t increase this to a whole year, unlike the fixed rate method from 1 March 2023). Using this, you can claim the business/work use of everything.
- data & internet
- mobile & home phone usage
- electricity & gas
- computer consumables
- stationery
- decline in assets such as computers and office furniture
- repairs and maintenance of said assets
- cleaning (if you have a dedicated office)
This is now the accountants preferred method as it results in the highest deduction. But if you don’t have good records, we will use the Fixed Rate Method – be warned!
Keeping Records
No matter what method you use, you have to be able to prove it. Keep a diary on you desk for 4 weeks of the year (or the whole year if you’re using fixed rate) and write down your start and finish times, go through your phone bill for a month and compare private vs business calls to determine your deductible percentage. Try and record your Facebook scrolling vs work research on your phone or home computer for internet deductible percentage. And last but not least, don’t be afraid to make a claim – if you’re actually using these things to generate an income, you can claim it!
Make use of the ATO myDeductions App to help you out with recording your expenses too, especially the big purchases like a computer or phone.
This only a short guide on how to maximise your homework – please contact us for a more tailored approach to your specific needs.
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Should you need assistance, please do not hesitate to contact us.
T: +61 3 9550 6900 E:admin@dekretser.com.au