New Changes to Work from Home Deductions for 2022-23: What You Need to Know
One of the big changes of the pandemic was the working from home phenomenon. As we have come out the other side many employers have decided to keep their workforces at home for all or part of the week. When you work from home you should be eligible to claim tax deductions for additional expenses like electricity, internet, and phone bills. Pre pandemic the ATO allowed (with the support of a one-month diary) taxpayers to claim 52 cents per hour. Taxpayers making this claim were not allowed a separate claim for depreciation of home office fixtures and fittings. However, they were allowed to claim the work-related portion of internet and mobile phone costs. During the pandemic the ATO extended this rate to 80 cents per hour with no other claims. As a result, many clients with high internet and mobile phone usage stayed on the 52 cents per hour
The Australian Taxation Office (ATO) has introduced changes to the working from home deduction for the 2022-23 financial year, including a revised hourly rate of 67 cents per hour. This rate has decreased from the previous rate of 80 cents per hour, but it’s still a great way to claim your work from home expenses without the hassle of tracking all your receipts.
There are two methods to claim your work from home deductions: the fixed rate method and the actual cost method. The fixed rate method is the easiest way to claim your deductions, as you only need to keep a record of the hours you’ve worked from home so you can apply the new hourly rate of 67 cents per hour. On the other hand, the actual cost method requires you to keep a detailed record of all your work-related expenses, including receipts, bills, and invoices. With this method, you can claim the exact expenses you incurred while working from home, which may result in a higher deduction.
Here is what the ATO say about record keeping….
“From July 1, 2022 to February 28, 2023, we’ll accept a record which represents the total number of hours worked from home (for example a four-week diary),” he said.
“From March 1, 2023 onwards, taxpayers will need to record the total number of hours they work from home.”
Key Takeaway:
- The Australian Taxation Office (ATO) has introduced changes to the working from home deduction for the 2022-23 financial year, including a revised hourly rate of 67 cents per hour.
- There are two methods to claim your work from home deductions: the fixed rate method and the actual cost method.
- The revised fixed rate method is the easiest way to claim your deductions, while the actual cost method provides a higher deduction if you have significant work-related expenses.
- To determine which method is best for you, consider your specific circumstances and seek advice from tax professionals.
- Keeping accurate records of your work-related expenses is essential for both methods.
To help you navigate these changes and maximize your work from home deductions, the expert team at MKG Partners is here to assist you. We can help you determine which method is best for your specific circumstances, and ensure you claim everything you’re entitled to while remaining compliant with the ATO’s rules and regulations. Contact us today to schedule a consultation and take the first step towards maximizing your deductions!
