Methods to claim working from home expenses

Working from home? Are you claiming your expenses on your tax return? Here are the 2 methods available to calculate your WFH claim correctly and avoid audit risk.

Working from home is becoming the norm for many people. It’s important to think about the deductible expenses that you may be able to claim when working from home and make sure you include them in your tax return.

To claim working from home expenses, you must:

• be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
• incur additional running expenses as a result of working from home
• have records that show you incur these expenses.

The Australian Taxation Office (ATO) has recently issued new guidelines regarding the claiming of expenses for working from home or home office purposes. These guidelines are effective from 1 July 2022, and it's important to understand how they work in preparation for your 2023 tax return.

What methods were available to claim home office expenses before 1 July 2022?

In the years prior to 1 July 2022, including the 2022 financial year affected by COVID-19, individuals had the following methods available for claiming working-from-home expenses:

1. The shortcut (80 cents per hour) method
2. The fixed-rate method (52 cents per hour method from 1 July 2018)
3. The actual expenses method, which involved analyzing separate additional running expenses incurred while working from home and claiming the work-related portion of those costs. This method could be used alone or in conjunction with the fixed-rate method.

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What methods are available to claim home office expenses from 1 July 2022?

In the 2023 financial year, you can choose between the following two methods to claim a tax deduction for working from home:

1. Revised fixed-rate (67 cents per hour) method
2. Actual expenses method only

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Please note that the shortcut (80 cents per hour) method ended on 30 June 2022.

1. Revised Fixed Rate Method

You no longer need a dedicated work area or separate room used as an office. The revised rate of 67 cents per work hour covers your running expenses.

Expenses included in the revised fixed rate are:

• data and internet
• mobile and home phone usage
• electricity and gas
• computer consumables (e.g. printer ink)
• Stationery

You can claim a separate deduction for the decline in value of assets used while working from home, such as computers and office furniture and the repairs and maintenance of these assets. You can claim for cleaning, only if you have a dedicated home office.

You must keep records of hours worked and work-related expenses and a diary to show work usage for the internet and assets. See this quick ATO guide.

2. ATO Home Office Actual Cost Method

The actual expense method allows you to claim the specific costs directly associated with working from home. This includes expenses such as electricity, gas, internet bills, phone bills, stationery, and depreciation of office furniture and equipment.

To use the actual expense method, you need to maintain detailed records and evidence of the actual expenses incurred. This may include keeping receipts, invoices, and documentation to support your claims.

It's important to note that the actual expense method requires more record-keeping and can be more complex compared to the revised fixed-rate method. You need to accurately calculate and apportion the work-related portion of each expense based on your home office usage. If you plan to use this method, see ato.gov.au/actual-method.

Talk to us about calculating your WFH deduction. We are here to help.