From 1 July 2022, the ATO states that taxpayers who are working from home can claim deductions based on their actual expenses or they can potentially adopt a revised fixed rate method which uses a rate of 67 cents per hour.
In order to use the revised fixed rate method, the taxpayer must meet the following basic conditions:
The running expenses covered by this method are:
While no separate deduction can be claimed for the expenses listed above if using the revised fixed rate method, taxpayers can potentially still claim depreciation deductions for assets used while working from home (e.g., a computer, desk, office chair etc) along with any other running expenses not listed above, provided the normal deductibility requirements are satisfied.
Importantly, the taxpayer does not need to have a separate home office or dedicated work area set aside in their home in order to rely on the fixed rate method.
The ATO confirms that if more than one taxpayer in the household is working from home at the same time, each taxpayer will be able to apply the fixed rate method if they separately meet the requirements set out above.
The ATO indicates that it has high expectations when it comes to keeping records when taxpayers want to apply the revised fixed rate method.
For example, for the 2023-24 and later income years, the ATO expects the taxpayer to keep a record for the entire income year of the number of hours they worked from home during that income year. An estimate for the entire income year or an estimate based on the number of hours worked from home during a particular period will not be accepted.
Having said that, for the 2022-23 income year only, taxpayers need to keep:
The PCG has only been issued in draft form at the moment and we will provide further updates when the PCG is issued in final form or if the ATO provides additional guidance in this area.
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