New ‘work from home’ Deduction Rules – all you need to know.

The ATO has issued new draft guidelines around a new method (the revised fixed rate method) of calculating work-from-home running expenses from 1 July 2022 (as an alternative to calculating the actual work-related portion of all running expenses). 

The new revised fixed rate method will replace both:

■the 52 cents fixed-rate method for electricity and gas expenses, home office cleaning expenses and the decline in value of furniture and furnishings,

■the short-cut (COVID-19) 80 cents method (for all additional running expenses).

You are eligible to use the revised fixed-rate method from 1 July 2022 if you:

■work from home to fulfil your employment duties or to run your business (a separate home office or dedicated work area is not required)

■incur additional running expenses that are deductible, and

■keep and retain records of the time spent working from home and of the additional running expenses incurred.

New rate

The new rate of 67 cents (replacing the fixed rate of 52 cents was “based on the Australian Bureau of Statistics (ABS) household expenditure survey with consideration of annual Consumer Price Index (CPI) weightings”. It allowed 52c per hour for each hour a taxpayer worked from their home office to calculate their electricity and gas expenses, home office cleaning expenses and the decline in value of furniture and furnishings. In addition, a separate deduction for the taxpayer’s work-related internet expenses, mobile and home telephone expenses, stationery and computer consumables and the decline in value of a computer, laptop or similar device could be claimed.

The revised 67 cent fixed rate under the new rules is inclusive of:

■internet expenses

■mobile and/or home telephone expenses, and

■stationery and computer consumables.

The inclusion of these expenses within the revised fixed rate, when coupled with the current high inflation environment, means that there is a high likelihood that taxpayers may be worse off when moving from 52 cents to 67 cents.

Record keeping

From 1 January 2023, will see the need for you to keep a record of the actual hours worked from home (e.g. timesheets, rosters or a diary kept contemporaneously). This is more onerous than the 52 cent method where you only needed to keep a record to show how many hours you worked from home.

The ATO under the new revised fixed rate method also requires evidence in relation to each of the running expenses listed above.

For energy, mobile and/or home telephone and internet expenses, one bill per item needs to be retained.

If the bill is not in your name, additional evidence is needed to prove that you incurred the expenditure. For stationery and computer consumables, one receipt needs to be kept for an item purchased.

Under the new method, the amount that can be claimed will potentially be lower, while the compliance obligations are higher – the taxpayer not only needs to keep a record of times spent working from home, but also there is a need to keep an invoice/receipt for each of the additional costs, such as an electricity bill. 

This is a new requirement which never formerly existed under either of the replaced fixed rate methods. While the new draft guidance offers a transitional arrangement until December 2022, individuals currently availing themselves of the 52 cent fixed rate method will need to consider whether they can meet the additional administrative burden from 1 January 2023, or whether the “actual expenses” method is amore achievable alternative.

Contact Us

If you are uncertain which method is best for you please contact us directly to discuss your circumstances.

Please do not hesitate to get in touch and one of our de Kretser members would love to help you in the right direction.

T: +61 3 9550 6900 E:admin@dekretser.com.au

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Spring Clean with de Kretser

As we collectively enter the last quarter of 2022, the de Kretser team are here to assist in every aspect of your business.

We believe strategies, implemented together, will immeasurably help your business to reduce wasting time and money, increase productivity and align your business goals for the new year. 

So, get ready to spring into action and make your business shine with a clean from the digital to physical world!

6 Step Guide to Spring Cleaning Success

1. Digital Dust off

When you’re occupied by your business, the days go quickly and not all the backend business is completed.

It is now time for the digital dustpan and broom.

As a busy business owner your emails, PDF’s, contracts, documents etc. can quickly pile up and leave your computer’s hard drive overflowing with redundant and outdated information.

Spring is your opportunity to purge your inbox and to trash the things that were never used, or needed.

While you’re clearing out your inbox, you can also do some other digital spring cleaning. Go through old files on your computer and delete unnecessary documents and folders. 

Create folders and place the communications already completed. Name them simply for easy access.

Do not stop with a simple Spring purge – set yourself up with a system for success.

How will you action a new communication from a client going forward?

How will you file what is necessary properly to save searching time in the future?

How will you make time, or task a team member with the consistent management of enquiries and things to do?

Set times for weekly meetings so that your inbox will not be a bother any longer.

2. Cleanse your Multi-Media Face

In today’s world – you must have an online presence if you want to grow and thrive.

Your website can easily collect dust and damage your brand. 

Chances are, your business has grown and changed during the last year, particularly in the digital space! You might have revised your mission. Maybe you completely switched your business logo or colour scheme.

Spring is a great time to scour your website for things that don’t line up with your business’s current brand.

At least once a year also you should also –

  • Update testimonials on your website/socials.
  • Look through content on the business website that needs to be rewritten to better reflect your company’s offerings or target market.
  • Increase the amount of external links on your website and/or blog posts – this will increase your website standing in an organic google search.

Don’t limit spring cleaning to the beginning of the year or springtime. Try to “spring” clean your website and socials throughout the year ensuring your messaging is on brand and engaging. 

3. Clean that Business Book shelf

Your business transactions and financial records can help you forecast your financial future and make smart decisions about your finances.

Start now.

It is time for you to look at your files and accounts, sort receipts, and digitise where you can. This is not hard, it just takes a moment.

Consider using accounting software to track transactions and make spring cleaning your books a breeze.

Set up systems for all staff so that everyone is following the same processes which will save time in the future.

4. Call a Friend

Dedicated and solid business connections are the backbone to any successful enterprise.

When was the last time you updated your client contact list?

When was the last time you personally talked to, or met with a loyal customer?

Has anyone, supplier or client, dropped off the radar? Do you have processes in place that stops this from happening?

Now is the time to get in touch with your closest business allies. Keeping contact genuine and consistent goes a long way to retaining your most valuable contacts and will aid in the growth of your relationships throughout the years to come.

5. Strategic Business Planning

Businesses constantly develop and change.

Your company is ever-changing, your business plan should be, too.

The creation of a business plan is a wonderful initiative though is only of use to your business if you use it!

High calibre businesses set aside time each year to spring clean their business plan.

Now is the time to reflect on the past year and ask your trusted colleagues – what kind of changes has your business made in the last year? If ever there was a time to do this – it is now!

After the period of change Australian businesses have endured it is time for a re-organisation.

What worked and what didn’t for your cashflow?

Where are your most lucrative streams of revenue coming from?

Did you add or remove products? Are you targeting a new market? Or, did you completely change your business structure? Retraction? Expansion?

Remember, entrepreneurs: your business plan is the foundation of your company. Take the time to revisit it each year. 

6. Marketing

Like your business, marketing tactics are constantly developing. And each day, a new marketing trend pops up and with it, a new opportunity for your business.

The world is at your feet when you market your business correctly. How you market will be informed by your business plan and client feedback. Identifying who you are and what you do goes great lengths to understanding who your customer is, what they want and how to provide it for them.

Spend some time this spring freshen things up by:

  • Researching new marketing trends
  • Investing in social media
  • Automating tasks (e.g., email marketing)
  • Investigate the integration of a CRM into your business
  • Going to a conference or trade show
  • Revisiting your brand
  • Analysing last year’s data

Keeping an eye on your business marketing analytics is also a brilliant way to inform your future directions for growth.

7. Your Working Environment

Whether you are working from home, or from an external premises – now is the time to look at your place with new eyes.

Ask yourself, and your staff – what would you think if you were coming here for the first time?

First impressions are powerful.

Spring cleaning your work environment goes further than a fresh feeling. Organisation in the physical world sets a standard for success. Doing some decluttering around the office will bring a brilliant feeling of renewal.

Working together as a team on this task will enhance your success. The orientation of your spaces must be considered and how they are used by the people who work with in them. Stand up desks may be a consideration, a stocktake of supplies may be needed or a look at the physical filing or way information is distributed or displayed in your spaces may need a re-think.

Make a list, ask everyone for their thoughts on what works, what needs work and then – get to work on making your environment sparkle and shine – together.

Begin the process now with de Kretser – we are ready to assist you with your requirements.

T: +61 3 9550 6900 E:admin@dekretser.com.au

To stay informed and connected, follow us on LinkedIn and Facebook