New working from home tax changes! What you need to know:

New working from home tax changes!
What you need to know:

The Australian Taxation Office (ATO) has significantly changed the way that taxpayers claim deductions for costs incurred while working from home. From 1st July 2022 the old fixed rate method of $0.52 cents per hour can no longer be used to calculate your deductions. The new guidelines will replace the 52 cent fixed rate method with a 67 cents per hour flat rate. Initially that looks like a better deal, but the 67 cents flat rate does not allow for separate deductions for expenses such as Mobile & Home phone usage. No mobile data or internet expenses, no stationery or any computer consumables, such as printer ink and paper cannot be claimed separately under the new fixed rate method.

This will ultimately result in a decreased deduction amount for most people.

Record-keeping requirements are even tougher in 2023.

To claim the home office deduction, you must keep the following records:

  • Taxpayers need to keep a record of all the hours worked from home for the entire income year – the ATO won’t accept estimates, or a 4-week representative diary or similar document under this method from 1 March 2023.
  • Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.
  • Records must be kept for each expense taxpayers have incurred which is covered by the fixed rate per hour (for example, if taxpayers use their phone and electricity when working from home, they must keep one bill for each of these expenses).

No (80 cents) shortcut method – it ended 30 June 2022.

The ATO has also removed the shortcut method for the 2023 income tax return, which means you can no longer claim a deduction of 80 cents per work hour for all home office expenses that were introduced due to COVID – 19.

Instead, you must use the fixed rate method of 67 cents per work hour.

Expenses are not covered by the fixed rate.

The fixed rate does not cover the following expenses:

Deduction for the decline in value of depreciating assets for work-related use of technology and office furniture such as chairs, desks, computers, bookshelves.

These are generally depreciating assets that decline in value over time can still be claimed separately. (Items must cost more than $300).

To be eligible to claim the revised 67 cents Fixed Rate Method you must meet all the following criteria:

  1. Work from home must be substantive and directly related to the income producing activities.
    Minimal tasks like checking emails or making work related phone calls will not be considered substantive, on or after the 1 July 2022 You will not be required to have a designated work space at home.
  2. You must incur additional running expenses and must not be reimbursed for the costs. An employee who works from home two days a week but resides with his/her parents and does not contribute to the running costs will not be eligible to claim a home office deduction.  Additional running costs include internet, electricity, mobile phone and stationary expenses.
  3. You must keep relevant records for the time spent working from home.
    Timesheets or rosters are required to show the exact number of hours spent working from home. The old method of keeping a 4- week diary and extrapolating that over the year will not be accepted. You must be able to provide invoices for the additional running expenses such as electricity, internet, mobile phone or stationery. If the invoice is not in your name, you must show evidence that the expense is shared, this could include a bank transaction or evidence that the bank account used to pay the expense was a shared account.
  4. Additionally, if claiming a separate deduction for the decline in value of depreciating assets used while working from home, relevant records must be kept


The key rule is that if you can’t prove the costs were incurred for the entire financial year that you worked– either through diary records, receipts, logbooks or similar; then you can’t claim the deduction.

Bank statements don’t contain enough info to satisfy the ATO, so you’ll need to keep the actual invoices for all of your claims.

You must keep an ongoing diary for each day of the year you work from home. ESTIMATES ARE NO LONGER ACCEPTED:  4-week diary calculations applied to the rest of the income year will not be accepted (as it was with previous methods).

If you require further information please visit the ATO website for more information.

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