The Taxation Office has announced that the home office claims will change for the 2023 financial year. The rate has also been changed as well as what can be claimed in addition to the home office rate.
The most notable change is in relation to record keeping. From 1 March 2023 in order to claim home office expenses following the set rate method individuals will be required to keep records of all the time spent working from home.
For the 2023 financial year, the $0.80 shortcut method will no longer be available. The only methods available for home office usage claims will be the new “Fixed Rate Method” and the “Actual Cost Method”.
The changes to the home office claims are outlined below.
Changes to the Fixed Rate Method
Rate
- The new fixed rate is $0.67 per hour worked from home.
What’s covered by the new rate?
- The revised method now covers the following expenses:
- Gas and electricity
- Mobile and home phones
- Internet
- Stationery
- Computer consumables
- No additional tax deduction for any of these expenses can be claimed if you use this method.
What can be claimed separately?
- Under the revised new rate method office furniture and equipment can be claimed separately (please note – if the asset is above $300, it will need to be depreciated over the life of the asset and cannot be claimed outright).
- You may also claim any repair costs for those assets, as well as cleaning costs to clean a dedicated home office.
Record Keeping
- From 1 March 2023 – all taxpayers must keep record of all hours worked from home during the financial year.
- The Taxation Office no longer accepts estimates or 4-week representative diaries.
- Records for hours working from home can be in any form provided they are kept as they occur.
- It is also recommended that these records are kept for at least five years from the notice of assessment in case of review Taxation Office.
Evidence examples:
- Timesheets
- Rosters
- Logs of time spent accessing employer systems or online business systems
- Time-tracking apps
- Diary or similar document kept contemporaneously (during the same period)
Actual Cost Method
The Taxation Office has not announced any changes to the actual cost method – however, below is a refresher on how this method works.
- The actual cost method permits all usage expenses to be claimed (i.e., gas, electricity, cleaning, heating, cooling, internet, etc) based on the additional cost from working from home.
- An apportionment must be created between work and private use to claim these expenses by creating a 4-week representative diary to show a usual pattern of work.
- There is no rate for hours worked from home, you are purely only claiming the expenses based on the additional costs due to working from home.
Please note, the ATO would also like to remind everyone:
- You can only claim expenses that have not already been reimbursed by their employer.
- Any assets purchased above $300 must be depreciated over its effective life.
If you have any questions or concerns about these changes, please do not hesitate to contact our office to speak with one of our accountants or view the changes on the Taxation Office website.
