Work from home deductions
New Australian Work From Home Tax Deductions
The Australian Taxation Office (ATO) has announced new changes to the way that taxpayers can claim deductions for costs incurred when working from home. The changes, which take effect from 1 July 2022, will make it easier for taxpayers to claim deductions and will reflect the contemporary working from home arrangements.
Under the new rules, taxpayers can choose to claim deductions using either the "actual cost" method or the "fixed rate" method.
The actual cost method
The actual cost method allows taxpayers to claim the actual costs they incur when working from home. This includes expenses such as:
Electricity
Gas
Phone and internet
Stationery
Computer consumables
Home office equipment
Taxpayers who choose to use the actual cost method must keep records of all of their expenses. This includes receipts, invoices, and bank statements.
The fixed rate method
The fixed rate method allows taxpayers to claim a flat rate deduction of 67 cents per hour for the time they work from home. This rate covers the following expenses:
Electricity
Gas
Phone and internet
Stationery
Computer consumables
Taxpayers who choose to use the fixed rate method do not need to keep records of their expenses.
Which method should I use?
The best method for you will depend on your individual circumstances. If you have a lot of expenses, the actual cost method may be the best option for you. However, if you do not have a lot of expenses, the fixed rate method may be a simpler and more convenient option.
More information
For more information on the new Australian work from home tax deductions, please visit the ATO website: https://www.ato.gov.au/individuals/income-deductions-offsets-and-records/deductions-you-can-claim/working-from-home-expenses/