Under this guidance, the ATO will allow you to make a claim of 67 cents per hour for time spent working from home. This claim is a simplified method which includes expenses for:
- energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while working from home
- internet expenses
- mobile and/or home telephone expenses, and
- stationery and computer consumables.
This amount is different from the previous couple of years where an amount of 80 cents per hour was available if you were required to work from home due to COVID-19, or 52 cents per hour under the previous fixed rate method.
However, under the revised fixed-rate method, a separate claim can now made for depreciation and repairs and maintenance on furniture and equipment.
What is Working from home?
WFH is carrying out your employment duties or activities involved in running your business. The work must be directly related to the income producing activities and does not cover minimal tasks such as taking occasional phone calls or checking emails. The work does not need to be carried out in a dedicated workspace such as a home office but must result in additional running expenses of at least one type described in the guidelines.
What costs are included in the fixed rate of 67 cents per hour?
The table below shows the costs included in the fixed 67cph rate, and a comparison of the previous treatment under the 52cph rate. The new rate takes into account costs which could previously be claimed in addition to the 52 cents. Notably mobile phone use is now included in the fixed rate and cannot be claimed in addition to the fixed rate, however depreciation on your mobile phone handset can be claimed separately.
|Additional Running Expense||Included in 67cph rate from 1/7/22||Covered by 52cph rate to 30/6/22|
|Electricity & Gas (for heating, light, cooling and running electronic items)||Yes||Yes|
|Mobile and home phone expenses||Yes||No|
|Stationery & computer consumables||Yes||No|
|Cleaning home office||No||Yes|
|Decline in Value of home office furniture/fittings||No||Yes|
|Decline in value of other depreciating assets (e.g. computer equipment)||No||No|
Records you must keep:
- Evidence of hours worked:
To make this claim, you will need to keep evidence of hours worked from home. This cannot be an estimate based on a representative time period but must be kept for all hours you are claiming for. Examples of evidence include timesheets, rosters, logs of time spent accessing online systems, time tracking apps or a diary kept contemporaneously.
NOTE – from 1 July 22 until 28 February 23, the ATO will allow records for a representative period to be applied, however from 1 March 2023 full records of hours must be kept.
- Records of running costs:
Once document for each running cost, such as an invoice or credit card statement, must be kept for each type of additional expense incurred during the year. For example, a phone bill, internet statement, electricity bill.
- Records for Decline in Value:
Receipts for purchase of equipment or furniture showing date of purchase, cost etc.
The following example of record keeping is from the ATO’s PCG 2023/1:
Example 7 — keeping and retaining relevant records
Pamela is employed as a solicitor. She works from home some evenings or on the weekend, in order to meet deadlines. The number of hours Pamela works from home varies from week to week.
During the income year, Pamela keeps a record of the total number of hours she spends working from home. She does this by making an entry in her electronic calendar when she starts and finishes working from home on a particular day.
When she is working from home during the income year, Pamela incurs electricity and internet expenses. Pamela is also claiming the decline in value of a desk and a laptop computer she uses when she works at home.
To show she has incurred additional running expenses, Pamela keeps:
- one quarterly electricity bill
- one monthly invoice for her home internet
- receipts for the desk and laptop that she purchased and uses while working from home, and
- records demonstrating her work-related use of her desk and laptop.
Pamela has kept relevant records for the income year.
Alternative method for claiming work from home deductions — Actual Cost
The alternative to the fixed rate method is the Actual Cost method, which has not changed. The actual cost method allows you to claim a deduction for the actual expenses you incur when of working from home.
You may be able to claim a deduction for each of the expenses you incur, such as data and internet, mobile and home phone usage, electricity and gas, computer consumables (e.g. printer ink), stationery, the decline in value of assets used while working from home, such as computers and office furniture, as well as any maintenance and repairs of these items, cleaning (only if you have a dedicated home office).
The actual cost method requires detailed calculations and records. For example, you will need to know and have records such as the cost per unit of electricity and average units used per hour, the floor area of a your dedicated work space as a percentage of your home (if applicable), a record of work related phone and internet use kept for a four week representative period, as well as receipts for any expenses.
If you require any more information about calculating your working from home deductions, please let us know and we will be happy to assist you.