There are three criteria that need to be satisfied to be able to claim a deduction for additional running expenses while working from home.
- Taxpayers must be working from home while carrying out their employment duties or carrying on a business
- They must incur additional running expenses of the kind outlined below which are deductible as a result of working from home, and
- They must keep and retain relevant records in respect of the time they spend working from home and the additional running expenses they incur.
Option 1 – Revised fixed-rate method
There is a new fixed rate of 67c per hour for each hour worked from home during the 2022/2023 tax year. This new fixed rate covers the following expenses:
- Electricity and gas expenses for lighting, heating/cooling and electronic items used while working from home
- Home internet expenses
- Phone expenses (mobile and landline), and
- Stationery and computer consumables.
Please note!
If the employer reimburses the taxpayer or pays for any of the above additional expenses, they will not satisfy the required criteria and will not be able to claim deductions for any of the working-from-home expenses using the fixed rate method.
The revised fixed-rate method can also be used by businesses that operate from home to claim home-based business expenses.
The following are the fixed-rate method requirements:
- From 1 July 2022 to 28 February 2023 – a record which is representative of the hours the taxpayer worked from home
- from 1 March 2023 to 30 June 2023 – a record of the total number of hours the taxpayer worked from home (such as a timesheet, roster or diary) as well as evidence they paid for each of the expenses they incurred that are covered by the fixed rate method (for example, a phone or electricity bill).
The taxpayer will also need records for any equipment they bought to work from home, like technology or furniture (which provides details of the supplier, cost, and date acquired).
Option 2 – Actual cost method
This option allows a taxpayer to claim the actual additional costs incurred while working from home.
- Electricity (heating/cooling and lighting) – to work out the costs of electricity used
- Workout the cost of the unit of power used by the equipment/appliances
- Workout the average number of units used per hour (power consumption per kilowatt hour for each equipment/appliance)
- Phone, internet, data – from the itemised phone/internet bill workout the work-related portion of the average usage representing at least a four-week period then calculate the annual costs.
- Computer consumables and hardware depreciation – from the original purchase costs, calculate the actual work-related usage portion of the expense.
- In some cases, taxpayers may be eligible to claim occupancy expenses, which have different eligibility criteria
Follow this link for more information https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Working-from-home-expenses/