The ATO announced changes to working from home (WFH) deductions.

Taxpayers can choose either the ‘actual cost’ or the ‘fixed rate’ method to claim WFH deductions. Only the fixed rate method is changing. The revised fixed rate method applies from 1 July 2022 and can be used when taxpayers are working out deductions for their 2022–23 income tax returns.

From 1 July 2022 to 28 February 2023, the ATO will accept a record representing an estimate of the total number of hours worked from home (such as a 4-week diary). From 1 March 2023 onwards, taxpayers must keep records of the total number of hours they actually work from home.

Revised fixed rate method

The changes are:

• The cents per work hour have increased from 52 cents to 67 cents and it covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables.
• Expenses that can be claimed separately:
  • Depreciation of equipment used while WFH.
  • The repairs and maintenance of these assets.
• The costs associated with cleaning a dedicated home office.
• Taxpayers are not required to have a dedicated home office to claim WFH expenses under this method.
• Taxpayers need to keep a record of all the hours worked from home for the entire income year. The ATO will not accept estimates, or a 4-week representative diary or similar document, under this method from 1 March 2023.
• Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.
• Records must be kept for each expense that taxpayers have incurred which is covered by the fixed rate per hour.

Actual cost method

The actual cost method hasn’t changed. Taxpayers can claim the actual work-related portion of all running expenses.