The ATO have recently released further guidance in relation to what an employee can claim when working from home, with the revised guidance increasing the compliance requirements on taxpayers.
During COVID times, taxpayers could use one of three different methods, however, the ATO has streamlined the process such that for the year ending 30 June 2023 the following methods are available:
- The actual (percentage of floor space) method where taxpayers have a dedicated workspace a percentage of their home expenses can be claimed with a 4-week diary of hours worked at home, as well as all receipts.
- A revised fixed rate method where taxpayers can claim a deduction of $0.67 per hour for each hour worked from home. In addition, taxpayers can claim an additional deduction for decline in the value of assets, utilities and home depreciation costs.
Whilst this appears more concessional taxpayers need to keep a full detailed record of dates and hours worked at home. In simple terms the above can be summarised as follows:
|Revised Fixed Rate Method|
|Phone costs, internet access & stationery||Claim||Included in $0.67 rate|
|Decline in value of furniture and equipment – chairs, computers etc||Claim||Included in $0.67 rate|
|Cost of using a room’s utilities||Claim||Included in $0.67 rate|
|Decline in value of curtains, carpets, and light fitting||Claim||Claim|
|Records||4-week diary||Full Year Diary|
Whilst the fixed rate has simplicity at its core, the record keeping of a full year’s diary is onerous, however, this needs to be weighed up against determining the percentage of what is business and what is private usage.
It is anticipated that the increased record keeping requirements and complexity will result in a reduced number of taxpayers making a claim. If a claim is to be made, then taxpayers will need to ensure their diary records are kept along with their receipts – the key question is whether you think it will be worth it!
If you need any further clarity, please reach out to your Engagement Partner.