The onslaught of work from home arrangements popularised due to the pandemic have prompted the ATO to revamp the way to claim deductions for WFH costs.
From the 1st of July 2022 you can choose to claim:
The fixed rate method, at 67 cents an hour
The actual cost method, claiming actual additional expenses incurred from remote work
The new fixed rate method – what to know
The previous rate of 80 cents per hour, adjusted to cover for additional expenses related to the COVID-19 pandemic, has been discontinued post pandemic, as well as the 52 cent per hour rate for those with a dedicated workspace at home.
Instead, with the realization that for many businesses, work from home arrangements are here to stay, the ATO has combined the two previous fixed rate methods, creating a sole rate of 67 cents per hour for all employees working remotely.Key considerations:
The rate covers energy expenses, phone usage, internet, stationery and computer consumables
The cost of the decline in value of assets must be claimed separately
In a household with more than one remote worker, each person can claim using the fixed rate method
To use the method, the ATO requires a record of all hours worked from home. Warnings have been distributed that the ATO will no longer accept estimates or a sample diary. A copy must be kept of at least one document for each running cost incurred throughout the year covered by the fix cost method. These must be kept for 5 years in case of an audit by the ATO.
The actual cost method – what to know
The actual cost method is suitable for workers whose expenses are higher. Using this method, workers can claim the actual additional expenses incurred from work from home. In order to do this, they must ensure they possess records of these expenses, as well as the extent to which the expenses relate to work. This method requires care, as the ATO is closely inspecting expense claims to see how directly related they are to how workers earn their income.
For more information, visit https://www.ato.gov.au/