We are returning to the important changes to home office deductions; in particular, how the ATO now requires you to prove the hours you have worked from home to continue to claim under the cents per hour / fixed rate method.

You need to comply with the new requirements in order to make a claim for this 2023/24 year. We cannot emphasise enough the requirement to keep actual records of all hours worked at home or have access to timesheets or roster records (if kept/accessible).

What are the key changes?

The ATO has re-set the rules for taxpayers who are working from home and wish to claim deductions based on either:

• actual expenses, or
• revised fix rate method of 67 cents per hour.

A key and indeed welcome change is that you do not need to have a separate home office or dedicated work area set aside in your home in order to rely on the fixed rate method.

Also, if more than one individual is working from home at the same time, each individual will be able to apply the fixed rate method if they each meet the requirements listed above.

To be eligible to claim tax deductions for working from home expenses, you must:

• incur additional running expenses as a result of working from home
• be working from home to fulfil your employment duties, not just completing minimal tasks
• keep records at the time you work to prove you incur the cost.

Revised Fixed Rate Method

The revised fix rate method:

• has increased from 52 cents to 67 cents per hour worked from home
• removes the requirement to have a dedicated home office space
• includes claims for:
  • data and internet
  • mobile and home phone usage
  • electricity and gas
  • computer consumables (e.g. printer ink)
  • stationery
• allows taxpayers to separately claim the work-related portion of:
  • immediate deduction for items that cost less than $300 (e.g. keyboards, computer mouses, power boards, desk lamps and chargers)
  • depreciation of office furniture and computers (items that cost more than $300)
  • repairs and maintenance of these assets
  • cleaning (only if you have a dedicated home office)

Actual Cost Method

The actual cost method allows you to claim a tax deduction for the actual expenses you incur as a result of working from home.

Using this method, you are required to keep an invoice/receipt for every expense you claim.

Expenses You Can’t Claim

The ATO has stated that you can’t claim a tax deduction for:

• coffee, tea, milk and other general household items, even if your employer may provide these at work
• costs that relate to your children’s education, such as equipment you buy – for example, iPads and desks, subscriptions for online learning
• items your employer provides – for example, a laptop or a mobile phone
• expenses where your employer reimburses you for the cost.

VERY IMPORTANT: The records you need to keep for the fixed rate method

You need to keep record of the total number of actual hours you worked from home to prove your fixed rate method working from home tax deductions for the 2024 financial year onwards.

To claim your working from home deduction using this method, you must keep:

• a record of the number of actual hours you work from home during the entire income year – for example, a timesheet, roster, diary or other similar document.
• at least one record for each of the additional running expenses you incur that the rate per work hour includes – for example, if you incurred electricity and stationery expenses keep one quarterly bill for your electricity expenses and one receipt for your stationery expenses.

Next steps

It has come to our attention that some clients have not been keeping record of the hours worked at home – that being one of:-

• timesheets
• rosters
• a diary or similar document kept contemporaneously.

We have therefore built a spreadsheet for you to use and which you can download here – 2023-24 Home Office Expenses – hours worked log

You must also keep evidence for each of the additional running expenses that you incurred. The documents you need to keep in order to demonstrate that you have incurred additional running expenses must show what the expense is and that you incurred the expense.

For energy, mobile and/or home telephone and internet expenses, you must keep one monthly or quarterly bill. If the bill is not in your name, you will also have to keep additional evidence showing you incurred the expenses; for example, a joint credit card statement showing payment or a lease agreement showing you share the property, and therefore the expenses, with others.

For stationery and computer consumables, which are occasional expenses, you must keep one receipt for each item purchased.

Please feel free to contact our office and speak with one of our expert accountants if you need any assistance with this so we can help you to maximise your tax deductions in your 2024 and future year Tax Returns.