Work from home deductions 2023
The Australian Taxation Office (ATO) has issued new guidelines to help you in making a claim for running expenses while working from home from 1 July 2022.
History of work from home deductions
Before 1 July 2022, an individual had the following choices to make when calculating a deduction for running expenses incurred while working from home:
the shortcut method — available from 1 March 2020 to 30 June 2022 — relating to expenses incurred while working from home due to COVID-19 and outlined in PCG 2020/3
the fixed-rate method — available from 1 July 1998 to 30 June 2022 — outlined in Part 5 of PS LA 2001/6, or
actual expenses method — calculating the actual expenses incurred as a result of working from home.
The latest fixed-rate method of 52 cents per hour was available from 1 July 2018. This amount was boosted to 80 cents per hour for the shortcut method while working from home because of COVID-19.
Practical Compliance Guideline PCG 2023/1
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 prior years when 80 cents per hour was available if you were required to work from home due to COVID-19.
However, under the revised fixed-rate method, you can now make a separate claim for depreciation on furniture and equipment that you use when you work from home. In order to make this claim, you will need to keep a diary of the days you work from home. This can be backed up by evidence such as your timesheet or a roster.
How PCG’s work
It is important to note that the draft PCG is not advising a rate to calculate a work from home deduction. PCG 2023/1 states that the ATO will not apply compliance resources if the individual makes a claim based on the guideline.
If an individual has their claim reviewed, if their claim is outside the scope of PCG 2023/1, the Commissioner will deny the deduction in full. If the individual wishes to object to this decision, they will not have the revised fixed-rate method available to make a claim. Under an objection, the taxpayer can only use the actual expenses method to claim a deduction.
Transitional rules
As PCG 2023/1 has been released partway through the 2022–23 income year, transitional arrangements are in place for individuals making a claim.
For the 2022–23 income year only, an individual may keep the following:
a record that is representative of the total number of hours worked from home during the period 1 July 2022 to 28 February 2023, and
a record of the total number of hours worked from home from 1 March 2023 to 30 June 2023.
From 1 July 2023, an individual must record actual hours worked from home for the entire income year. Records must be kept in one of the following forms:
timesheets
rosters
logs of time you spent accessing employer systems or online business systems
time-tracking applications
a diary or similar document kept contemporaneously.
If you require any more information about calculating this deduction, please let us know, and we will be happy to assist you further.
You can also download the work-from-home diary worksheets for the following financial years: