Do you want to claim the home office expenses you are entitled to claim for 2022/23?  Then read on as the ATO has made an important to change claiming home office expenses.

Furthermore, they apply from 1^st March.

We have been able to claim under one of two methods:-

• A percentage of all costs based off the work area or
• A set rate per hour

The set rate per hour had been 52 cents per hour but an alternative rate of 80 cents per hour was offered from March 2020 to June 2022 to accommodate all of those working from home for the first time and who were not used to keeping records.  The 80 cph rate was an all in rate.  Only the 52cph rate allowed one to claim phone, internet and assets (whether claimed in full or depreciated).  As I said, that 80cph rate is no longer available.

Please note that this post is not addressing claims where a business is run from home (with important capital gains tax implications).  That will be covered in a future post.

A new rate is available from 1^st July 2022 but please note:-

1. The rate has increased from 52 to 67 cents.
2. What the rate covers has changed.
3. There have been important changes to the records required.
4. But there is good news. The requirement to have an area set aside to undertake work activities has been removed.

What does the rate cover?

• Electricity and gas
• Home and mobile phone usage
• Internet connection usage
• Printing and stationery

The change is that other than electricity and gas, these costs could be claimed separately.

Depreciation is to be claimed separately

What records you now need to keep

• Receipts – but just one quarterly electricity or gas bill (I don’t know about you but I receive these bills monthly).
• A record of actual hours worked – no estimates. So you will need to keep timesheets, rosters, diaries and other such documents.
• You will need to keep these records for up to 5 years – even though most taxpayers are required to keep for less.
• Please note that for assets that are depreciated, one must keep the asset purchase receipt for 5 years from after the last depreciation claim. That could be 10 or 15 years after the date of purchase.  We suggest moving a copy of the receipt into next year’s tax records when starting your record keeping for a new financial year.

A partial year concession

These new rules announced last week apply from 1^st July 2022.

As a concession to those who haven’t kept a record of actual hours worked since 30^th June 2022 to 28^th February 2023, a reasonable estimate, or in the ATO’s words, a representative record, will suffice.

To be able to claim, you must keep an actual record of hours worked from 1^st March 2023.

How to keep records

• Paper
• Electronic – including the ATO’s myDeductions tool (which you can access at https://www.ato.gov.au/General/Online-services/ATO-app/myDeductions/)

This is an important change which you need to adhere to claim home office expenses from 1^st March 2023.

We welcome any questions you may have.