Changes to Working from Home Tax Deductions

The Australian Taxation Office (ATO) has recently updated the process for taxpayers to claim deductions for costs incurred while working from home. These changes aim to better reflect modern working from home arrangements for many individuals.

There are two methods for taxpayers to claim their working from home deductions: the “actual cost” or “fixed rate” method. However, only the fixed rate method is changing.

The revised fixed rate method is applicable from the 2022-2023 financial year. The updated method now includes the following changes:

• The fixed rate of deduction has increased from 52 cents to 67 cents per hour worked.
• Taxpayers no longer need a dedicated home office space to claim working from home expenses.
• The fixed rate now covers more expenses, such as energy (electricity and gas), phone usage (mobile and home), internet, stationary, and computer consumables.
• The ATO will require records of the total number of hours worked as well as evidence of expenses incurred.

In addition to a claim made under the fixed rate method, individuals can also claim the following:

• The decline in value of assets used while working from home, such as computers and office furniture.
• The repairs and maintenance of those assets.
• The costs associated with cleaning a dedicated home office.

The actual cost method has not changed and taxpayers can continue to claim their actual working from home expenses instead of using the fixed rate method.

The ATO will require records of the total number of hours worked as well as evidence of expenses incurred.

For full details, please refer to the ATO website or contact our office.

ATO announces changes to working from home deductions | Australian Taxation Office