Many Australian’s have moved into a permanent flexible working arrangement with their employers, so working from home expenses continue to be claimed on individual tax returns. If you are intending to claim any WFH deductions this year, read on, as there are a few rules you need to be aware of if you want to avoid an ATO audit.
To claim your 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 expenses as a result of working from home.
If you’re still working from home either part or full time, you are entitled to claim expenses using one of three methods:
The Shortcut Method
Introduced during COVID, the Shortcut Method is a temporary method to work out WFH deductions between March 2020 and June 2022.
You can use this method if you:
- worked from home and incurred some additional running expenses as a result
- have a record of the number of hours you worked from home, such as a timesheet, roster or diary.
Using this simplified method, you can claim 80 cents for every hour that your worked from home, providing you have a record of these hours. This amount covers all your expenses such as phone and internet costs, electricity and gas, and decline in value of equipment and furniture.
If you use this method, you cannot claim any other working from home deductions, even if you purchased new equipment. If you want to claim equipment, you will need to use either the fixed rate or actual cost method.
Fixed Rate Method
The fixed rate method allows you to claim 52 cents for every hour worked from home. You can also claim the actual work-related portion of your internet, phone and data expenses, as well as the decline in value of depreciating assets.
To make a claim using this method, you must have a dedicated work area in your home, such as an office.
To claim the work-related portion of your expenses under this method, you must have the following records:
- A record of the number of hours worked from home or a diary for a representative 4 week period to show your usual pattern of working at home
- Receipts or other written evidence showing the amount spend on expenses and depreciating assets you buy
- Phone accounts identifying your work-related phone calls and private phone calls to work out the percentage of work related use for a representative 4 week period
- A diary that shows your work related internet use, and the percentage of the year that you use your depreciating assets exclusively for work
If you create a record showing the hours you work from home during a 4 week representative period, you can then use that across the rest of the year to work out your total number of hours worked from home. However, if your work pattern changes, you will need to create another record.
Actual Cost Method
If you work from home less frequently, you can use the Actual Expenses method to work out your deductions.
Using this method, you work out your deduction by calculating the actual expenses you incur to produce your income when working from home. This may include the following expenses:
- Decline in value of depreciating assets – such as home office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices.
- Cleaning expenses, if you use a dedicated area for working.
- Heating, cooling and lighting – electricity and gas.
- Phone, data and internet
- Computer consumables and stationery – such as printer ink.
Under this method, you must keep a record of:
- The actual hours you worked from home
- Diary for a 4 week representative period to show your pattern of working from home
- All bills, receipts and other documents that show the additional running expenses that you incurred while working from home that you have used to work out your deduction
To make a claim using this method, you must have a dedicated work area in your home, such as an office.
Expenses you cannot claim
You can’t claim a deduction for the following expenses if you’re an employee working at home. These include:
- coffee, tea, milk and other general household items, even if your employer may provide these at work
- costs that relate to your children’s education such as equipment you buy – for example, iPads and desks, subscriptions for online learning
- items your employer provides – for example, a laptop or a phone
- any items where your employer pays for or reimburses you for the expense.
