The ATO has put out guidance sbout changes to work from home tax deductions, which affect the records millions of Australians need to keep and how much they can claim at tax time.
CPA Australia Senior Manager Tax Policy Elinor Kasapidis says: “Millions of Australians need to know about new changes to work from home tax deductions. Before the pandemic about two million Australians claimed deductions for working from home expenses. Due to the pandemic this jumped to about five million people.
“Before the pandemic, taxpayers who worked from home could claim 52 cents an hour and required a dedicated work from home area. The revised method does not require you to have a separate office.
“When the nation went into lockdown the ATO introduced a shortcut method for work from home expenses. You could claim 80 cents for each hour worked from home and did not need an ongoing diary or calculations of running expenses.”
“The shortcut method that was used by millions of people over the last few years to make their deductions is no longer available.
“We’re glad the ATO has released guidance on this issue. Work from home arrangements affect millions of people and we have been waiting for this information.
“Some Australians will still be under the impression they can claim a work from home deduction in the same way as they did during the height of the pandemic. This will not be the case after March 1.
“Under the new fixed rate method, you can claim 67 cents per hour worked from home. You don’t need a separate office. The rate includes phone and internet expenses, as well as electricity and gas usage and stationery. Taxpayers will need to claim decline in value of work-related equipment such as office furniture separately.
“Australians will need to keep an ongoing diary for each day of the year they work from home from March onwards. A four-week diary representative of the year isn’t going to cut it. They also need to keep some records about their expenses incurred while working from home, such as copies of utility bills.
“Tax agents should let their clients know about these new arrangements as soon as possible so they aren’t left in the lurch at tax time.
“The ATO has a big job ahead to ensure Australians are aware of their obligations.”
Note: CPA Australia has been asking the government to legislate a fixed rate method.
CPA Australia’s top four Rs to get your return right:
- Record everything:
“Get your record keeping right this tax time. Keep a detailed diary throughout the year noting down when you worked from home. Hold on to documents relating to your home expenses, such as electricity and other utility bills.”
- Retain receipts:
If you incur a cost when working from home, you should keep a receipt. This includes new office furniture and home office cleaning expenses.”
- Be Realistic:
“Be realistic when submitting your tax return. The tax office is unlikely to accept a deduction for a packet of TimTams eaten in your coffee break at home. As much as your colleagues like to see your pot plants, the ATO won’t want to see claims made for office décor.”
- Reach out:
“Seek advice when submitting your return and get help from a tax agent if you’re unsure. Reach out to a CPA who can help you understand your obligations and help you get your tax return right.”
