Changes to Working from Home Deductions
- Arnold Shields
- Aug 5, 2023
- 3 min read
Updated: May 15
The rise of remote and hybrid work arrangements has prompted the ATO to revise how Australians can claim tax deductions for working from home. From 1 July 2022, you now have two options: the fixed rate method and the actual cost method. Understanding both is key to choosing the most suitable and compliant option for your situation.
Eligibility and Record-Keeping Requirements
Before making a claim, ensure you meet the ATO’s eligibility requirements:
You must be genuinely working from home to fulfil employment duties (not just checking emails occasionally).
You must incur additional running expenses as a result of working from home.
Record-keeping is essential for both methods. From 1 March 2023, you must maintain a daily logbook or diary of the actual hours worked from home. Prior to this (1 July 2022 to 28 February 2023), a 4-week representative diary will suffice.
Revised Fixed Rate Method – Simplified for 2022–23
The ATO’s revised fixed rate method now offers a higher rate of 67 cents per hour worked from home. This is an increase from the previous 52 cents. The new rate covers:
Electricity and gas
Internet and phone usage (mobile and home)
Stationery and computer consumables
You no longer need a separate home office to claim under this method. It’s also easier because it includes common expenses that are otherwise difficult to allocate precisely.
📝 Tip: Keep bills and receipts on file – you don’t need to calculate usage per item, but you must still be able to show you incurred the cost.
What’s not included?
Assets and equipment – such as desks, chairs, monitors, and computers – are claimed separately:
Immediate deduction if the item costs $300 or less.
Must be depreciated if over $300 or part of a set that exceeds $300.
Actual Cost Method – More Accurate, More Effort
This method remains unchanged and allows you to claim exactly what you spend based on the work-related portion of expenses like:
Internet and phone
Power
Cleaning
Office furniture and technology
You must keep:
Detailed receipts and bills
A daily logbook of work hours or a representative 4-week diary
Calculations that apportion the work-related use of each item
Depreciation applies to assets over $300. You can use the ATO's Depreciation and Capital Allowances Tool to assist in working out the decline in value.
Choosing the Right Method
Feature | Fixed Rate (67c/hour) | Actual Cost |
Covers basic running costs | ✔️ Includes multiple costs | ❌ Must calculate each separately |
Depreciation of equipment | Claimed separately | Claimed separately |
Need dedicated home office? | ❌ Not required | ❌ Not required (unless claiming occupancy expenses) |
Record-keeping | Daily hours + receipts | Detailed receipts + calculations |
Important Considerations:
Regardless of the chosen method, it's crucial to understand what can and cannot be claimed as working from home expenses. Expenses covered by the revised fixed rate of 67 cents per work hour cannot be claimed additionally under this method.
Additionally, items like general household items (e.g., coffee, tea, milk) or expenses that have already been reimbursed by the employer are not eligible for deductions.
Need help?
At Dolman Bateman, we specialise in helping professionals optimise their tax deductions. Get in touch today to ensure you’re claiming everything you're entitled to – the right way.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
