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Working From Home? Your Tax Return Is Changing

It could impact you by more than $1000.

The Australian Taxation Office (ATO) is making changes to the way you can confirm tax deductions for working from home. Previously, you could use a fixed-rate method of 52 cents per hour, an actual cost method where you claim tracked hours and expenses or a shortcut method of 80 cents per hour, which was introduced during the pandemic.

The shortcut method no longer applies, and the fixed-rate method has increased from 52 cents per hour to 67 cents. While the rate is higher, there are new limits on what you can claim.

Under the current 52-cent method, items such as phone and internet expenses, stationery items and the decline in value of a computer or laptop can be claimed as a separate deduction. The new 67-cent rate covers total deductible expenses for your electricity and gas bills, phone usage, internet, stationery and computer, so you can’t claim any of these separately. You must also have a record of the hours you worked from home to make a claim.

If you use the new 67-cent method, you can’t claim any extra expenses, with a couple of exceptions. Taxpayers can still claim the decline in value and maintenance costs of work-from-home equipment such as computers and office furniture, as well as the costs of cleaning a dedicated home office.

The changes apply to this entire financial year, from July 1, 2022, aside from the record of the hours you worked from home – you must keep track of this from March 1, 2023. And you must be fulfilling your normal work duties at home, not just intermittently checking emails or taking a phone call.

What does this mean for the average taxpayer? Effectively, the 52-cent method has been scrapped, and the old 80-cent shortcut method has become the 67-cent method. There are estimates that the average claim could drop by up to $1300 with these changes.

Each year, Australians claim around $20 billion in work-related expenses, with the average tax return coming in at around $3000.

You can find out more at the ATO website.

Photography: Tom Ross

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