Sunday Feb 05, 2023

Working from home tax claim shortcut set to end – The Australian Financial Review


It ends with the current financial year, meaning taxpayers will have to use the fixed-rate method or actual cost method for claiming work expenses from July 1.

Institute of Public Accountants general manager for tax policy Tony Greco said the temporary shortcut method greatly reduced the administration required for taxpayers.

“With so many workers still either working entirely from home or under a hybrid model, its demise will increase the administrative challenge of taxpayers trying to claim home office expenses from July 1, 2022,” he said.

“The shortcut method allowed each taxpayer in the home to independently claim this deduction at the same time and in any part of the home.

“If three people in an apartment huddle around the kitchen table to perform work-related duties, then this is OK using the temporary method which relaxed the eligibility rules substantially.”

Under traditional claiming methods, the group would have to record their houses, provide tax invoices and apportion use between what is personal and what is work-related, on a “reasonable basis”.

In 2020, accountants H&R Block warned the shortcut could reduce tax returns and advised taxpayers to instead claim their individual expenses.

The Tax Institute’s senior advocate, Robyn Jacobson, said the easier record-keeping requirements had provided millions of taxpayers with an easy-to-calculate method of claiming expenses while working from home.

She said the need for a dedicated work area as part of deduction claiming rules should be reviewed in the future.

“The fixed rate method, currently 52 cents per hour, does not include telephone and internet expenses, nor depreciation on office equipment.

“Working out the extent to which telephone and data plans are used for a taxable purpose can be very difficult, as most people do not receive itemised bills these days, and there are significantly greater volumes of downloads in homes these days for personal use such as streaming TV shows and movies.

“The fixed rate method also requires the taxpayer to have a dedicated work area that they use when they work from home. The rate of 52 cents may no longer be appropriate in light of rising costs for power and gas.”

ATO assistant commissioner Tim Loh said officials were considering ways to modernise working from home deduction methods for the 2022-23 financial year.

“It’s important for taxpayers to keep good records so when it comes to the 2022-23 financial year they have a choice of the working from home method that is most appropriate to their circumstances, including records of all hours worked at home, receipts for all depreciating assets and equipment used when working at home [and] records of the personal and work-related use of assets and working from home expenses,” he added.


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