The fixed rate method for calculating your deduction for working from home expenses has been revised. The revised fixed rate method is $0.67 per work hour and available from 1 July 2022.

The fixed rate method has been revised to:

• increase the rate per work hour that you can claim when you work from home
• change the expenses the rate covers
• change the record keeping requirements
• remove the requirement to have a home office set aside for work.

You can also separately claim a deduction for the work-related use of depreciating assets such as office furniture and technology.

If you don’t use the revised fixed rate method, you need to use the actual cost method. You can no longer use the shortcut method.

These expenses are reported at question D5 of Individual Income Tax Return (IITR).

Record keeping for the fixed rate method

To claim your working from home deduction using this method, you must keep:

• a record of the number of actual hours you work from home during the entire income year – for example, a timesheet, roster, diary or other similar document
• at least one record for each of the additional running expenses you incur that the rate per work hour includes – for example, if you incurred electricity and stationery expenses keep one quarterly bill for your electricity expenses and one receipt for your stationery expenses

You need to keep your records for 5 years (in most cases) from the date you lodge your tax return.

You must keep records for depreciating assets from the time you buy them, that shows

• the amount spent on depreciating assets you buy
• the percentage of the year you use your depreciating assets exclusively for work, such as a diary or similar document.

You must also keep these records for other running expenses you are claiming as a separate deduction.

You need to keep these records for 5 years from the date of your last claim for decline in value.

Record keeping for 2022–23

If you haven’t been keeping a record of the actual hours you worked from home, for the 2022–23 income year only, you must be able to provide both:

• a representative record of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023 – for example, any kind of record of the hours you worked from home for a particular period that you can apply to the whole 8 month period.
• a record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023.

If you haven’t kept receipts or written evidence of your depreciating assets, you may still be able to claim a decline in value deduction if:

• you didn’t keep it because you were using the fixed rate method or shortcut method to calculate your working from home deduction in the income year you purchased the asset
• you have other evidence or records which show
  • you incurred the cost of the depreciating asset
  • when you bought the depreciating asset
  • your work-related use of the depreciating asset.

For more information, see TR 97/24 Income tax: relief from the effects of failing to substantiate.

Low and middle income tax offset

The low and middle income tax offset (LMITO) ended on 30 June 2022. It is not available for the 2022–23 income year.

Where to go next

• Go to question Will you need the Individual tax return instructions supplement 2023?.
• Return to main menu Individual tax return instructions 2023.
• Contact your Accountant

 

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For personal advice on your own unique situation you should always seek advice from your advice professional.