The ATO’s proposed approach to individuals claiming working from home deductions from 1 July 2002 has changed and the shortcut covid method is no longer available.
Individuals who are working from home can still 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.
However, to use the revised fixed rate method, the taxpayer must meet the following basic conditions:
• They must be working from home while carrying out their employment duties or carrying on their business on or after 1 July 2022.
• They must be incurring specific additional running expenses.
• They must keep and retain relevant records in respect of the time they spend working from home and for the additional running expenses they are incurring.
The running expenses covered by this method are:
• Energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while working from home.
• Internet expenses.
• Mobile and/or home telephone expenses; and
• Stationery and computer consumables.
This means no separate deduction can be claimed for the expenses listed above if using the revised fixed rate method.
You 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 met.
The good news is that you do 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. And, if more than one person in the household is working from home at the same time, each person will be able to apply the fixed rate method if they separately meet the requirements set out above.
Key item here is that the ATO has high expectations when it comes to keeping records.
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.
So don’t get caught up and start keeping records today. If you need help or have questions on how to keep sufficient records, feel free to reach out to us.