27 September 2023

New tax rules for workers working at home

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Victorian taxpayers working from home will need to keep work logs for the rest of the financial year in order to claim tax deductions following the introduction of a new ‘fixed rate’ method by the Australian Taxation Office (ATO)

Assistant Taxation Commissioner Tim Loh said taxpayers could choose one of two methods to claim working from home deductions, either the ‘actual cost’ or ‘fixed rate’ method.

Taxpayers can no longer use the shortcut method of 80 cents per hour which was introduced during the pandemic and applied from March 2020 to 30 June 2021.

Mr Loh said that under the revised fixed rate method, applying from 1 July 2022, cents per work hour had been increased from 52 to 67 cents.

“Items that are difficult and tedious for everyday Aussies to calculate actual work-use, like phone, internet and electricity expenses, are included in the revised rate,” Mr Loh said.

“Assets and equipment that typically give taxpayers a bigger deduction, such as technological items and office furniture, are not included in the revised rate and need to be claimed separately,” he said.

“Another benefit is that you no longer need a dedicated home office to use the fixed rate method.”

Under the previous 52-cents-per-hour fixed rate method, items like work-related mobile and home telephone expenses, internet expenses and stationery could be claimed as a separate deduction.

“No additional deduction for any expenses covered by the rate can be claimed if you use this method,” the Assistant Commissioner said.

He reassured taxpayers who hadn’t kept records so far this income year that transitional arrangements were in place for 2022-23.

“From 1 July 2022 to 28 February 2023, we’ll accept a record which represents the total number of hours worked from home (for example a four-week diary),” Mr Loh said.

However, he said that from 1 March, taxpayers would need to keep a record of all the hours they worked from home for the entire income year – “the ATO won’t accept estimates, or a four-week representative diary or similar document under this method from 1 March 2023”.

Further information on the changes can be accessed at this PS News link.

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