Working from home deduction changes for 2022–23

The Australian Tax Office (ATO) has announced changes to the way taxpayers claim working from home deductions for the 2022-23 income year and onwards, with alterations to the deduction rate and the method of recording work from home hours. 

The revised rate method applies from 1 July 2022 and can be used when calculating deductions for 2022-23 income tax returns.

From 1 July 2022 to 28 February 2023, the ATO will accept a record which represents the total number of hours worked from home (such as a 4 week diary). However, from March 1st 2023, taxpayers will be required to maintain a record of the total number of hours in which they worked from home.

The shortcut $0.80 per hour method, which was introduced during the pandemic, has ceased as of 30 June 2022.

Revised Fixed Rate Method

Rate

Increase in rate from 52 cent to 67 cents per hour worked from home.

What is covered by the rate?

• Energy expenses
• Phone and internet usage
• Computer consumables
• Stationary

What can be claimed separately?

• Decline in value of assets as a result of working from home
• Repair and maintenance of these assets
• Associated costs of cleaning a dedicated home office

Home Office

The revised fixed rate method no longer requires taxpayers to have a dedicated home office.

Record Keeping

• Taxpayers are required to keep a record of the hours in which they worked from home for the entire income year. 
  • The ATO will not accept accepts, a 4-week representative diary or similar documents under the revised method from March 1 2023. 
• Records of work from home hours can be made in any form, provided they are kept as they occur, by means of a timesheet, roster, or a diary for the full year. 
• Records must also be kept for each expense incurred by the taxpayer which is covered by the fixed rate per hour.

Actual Cost Method

There has been no changes to the actual cost method. Taxpayers are still able to claim the actual work-related portion of all running expenses.

This includes maintaining a record of all expenses incurred that are being claimed, including:

• All receipts, bills or relevant documents that show the taxpayers have incurred the expenses. 
• A record of the number of hours worked from home during the income year.
• A record of how the taxpayer has calculated the work-related and private portions of their expenses.

The ATO reminds taxpayers that the expenses they claim using the actual cost method cannot have been reimbursed by their employer previously.

Additional Information

Regardless of the method chosen by the taxpayer, purchases of assets and equipment for work exceeding $300 cannot be claimed immediately. The deduction must be claimed over multiple years and the work portion claimed. 

For further information about how these changes might affect you, contact the team at Knight.