Working From Home Deduction Changes for 2022-23

If you’re someone who works from home, you may be eligible to claim deductions on your tax return and may have done so in the past.

The ATO have announced big changes to the way these deductions are calculated for the 2022–23 income year with new stricter record-keeping requirements from March 2023.

Fixed Rate Method – New 67-cent rate

Under the revised fixed rate method, you can claim 67 cents per hour worked from home.  You no longer need to have a dedicated home office space.

This rate includes:

• electricity and gas
• phone (mobile and home)
• internet usage
• computer consumables
• stationery.

You can separately claim the work-related portion of the decline in value of depreciating assets – such as office furniture and technology.

The revised fixed rate method can also be used by businesses that operate some or all of their business from home to claim home-based business expenses.

If you plan to use the revised fixed rate method for your 2022–23 tax return, you will need to keep records that are representative of the hours you worked from home from 1 July 2022 to 28 February 2023.

From 1 March 2023 onwards, you will need to keep an ongoing diary to record of the total number of hours you work from home.

Actual Cost Method

Using the actual costs method, you work out your deduction by calculating the actual additional expenses you incur when working from home. This includes expenses you incur for:

• the decline in value of depreciating assets – fhome office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices.
• electricity and gas
• home and mobile phone,
• data and internet expenses
• stationery and computer consumables, such as printer ink and paper
• cleaning your dedicated home office.

Where you incur running expenses for both private and work purposes, you need to apportion your deduction. You can only claim the work-related portion as a deduction.

In limited circumstances, you may also be able to claim occupancy expenses (such as mortgage interest or rent).

To claim your work from home expenses using actual costs, you must keep:

• either a record showing
  • the number of actual hours you work from home during the entire income year – for example, a timesheet or spreadsheet
  • a continuous 4-week period that represents your usual pattern of working at home – for example, a diary.

You must also keep records that show:

• the additional running expenses you incurred while working from home, such as receipts, bills and other documents
• how you worked out the amount of your deduction.

Electricity and gas for heating, cooling and lighting

Work out the cost of your electricity and gas (energy expenses) for heating, cooling and lighting by using the:

• • cost per unit of power you use (your utility bill has this information)
  • average units you use per hour, which is the power consumption per kilowatt hour for each appliance, equipment or light used
  • total annual hours used for work-related purposes by checking your record of hours worked or your diary.

Phone, data and internet

If you receive an itemised phone or internet bill, you need to work out your work-related use over a continuous 4-week period. You can use your work-related percentage for the 4-week period to work out your expenses for the whole income year.

For example, you can mark your work-related calls on your monthly phone bill and work out your work-related use based on the number of those phone calls compared to your total calls.

For more information, see PSLA 2001/6 Verification approaches for electronic device usage expenses.

Stationery and computer consumables

Work out the cost of computer consumables and stationery by using receipts for the items you buy. If you use the item for both private and work-related purposes, you can only claim the work-related portion of the expense.

It’s important to keep accurate records of your working from home expenses to ensure you claim the correct amount and don’t get into trouble with the ATO. If you have any questions about claiming working from home deductions, it’s best to speak with a tax professional.