The Australian Tax Office has updated the rules about what you can claim on your tax return when working from home. The ‘fixed rate’ you’re allowed to claim to cover general working from home expenses has increased from 52c an hour to 67c an hour and you no longer need a dedicated home office in order to claim this. Here’s what you need to know.
Australia’s income tax system allows you to exclude a variety of work-related expenses from your ‘taxable income’– effectively making those expenses tax free. This includes expenses incurred by people who work from home. There are two ways you can claim these expenses. You can keep detailed receipts of your actual costs and claim them precisely. Alternatively, recognising this is complex, you can claim a ‘fixed rate’ per hour of work from home. It’s the fixed rate option that is changing.
The hourly rate for working from home is increasing from 52c an hour to 67c. The ATO says it has revised the rate to better reflect costs like home internet, phone bills, and home energy costs. If you choose to claim this fixed rate, you can’t claim those things separately. For the financial year up to the end of this month, the ATO says a diary covering a few typical weeks would suffice to prove you worked from home. From 1 March, you will need to keep track of the hours you work. You also no longer need a dedicated home office in order to claim.
A few work-from-home-related expenses are not included in this fixed rate and can be claimed separately even if you claim the fixed rate. This includes the costs of repairing and maintaining work-related assets and the cost of cleaning a dedicated home office. It also includes the value of work-related assets. Assets under $300 can be claimed immediately. Assets over $300 can be claimed over time as they ‘depreciate’ (decline) in value – the ATO website offers more details on this. You must genuinely be fulfilling your regular employment duties from home in order to be eligible to claim – not just checking the occasional email or taking the occasional call. You also can’t claim absolutely everything that might be provided to you in a physical office – for example, you are not allowed to claim general household items like coffee or milk.