Working from home has become the new normal, with many individuals finding themselves setting up home offices in order to carry out their jobs.
The Australian Taxation Office (ATO) has made recent changes to the way individuals claim their home office expenses on their tax returns. In this blog post, Nationwide Financial will guide you through the new changes and explain how to claim your home office expenses in 2023.
Changes to Home Office Expenses in 2023
The rate per hour an individual can claim has increased from 52 cents per hour to 67 cents per hour for each hour worked from home.
This fixed rate now includes expenses that used to be claimed separately.
Therefore, items such as internet expenses, home and mobile phone expenses, electricity, and gas used for heating, cooling, and lighting, stationery, and computer consumables, cannot be claimed individually if you claim the 67 cents per hour rate.
In addition to claiming the fixed rate, there are some extra deductions that can still be claimed.
These include the depreciation of assets that cost more than $300, expenses for work-related purchases up to $300, such as desk chairs and monitors, and the cost of cleaning your home office and repairing office furniture.
Changes to Record Keeping for 2023 Tax Returns
The ATO has also introduced changes to the way records should be kept for home office expenses.
Between 1 July 2022 and 28 February 2023, you must keep a record that is representative of the total number of hours you worked from home.
From 1 March 2023 and 30 June 2023, you must keep a record of the actual hours you worked from home. No estimates will be accepted. You can use any of the following methods to record your hours:
- Timesheets
- Rosters
- Employer system logs or online business systems
- Time-tracking apps
- A regularly updated diary, calendar, logbook, spreadsheet, or similar document
For home office running expenses, you must keep a record of the expenses that relate to your hours worked at home.
These records should include bills or invoices for power, gas, home phone, mobile, and internet expenses. If bills are not in your name, you must show evidence of the expense, such as a joint credit card statement or joint property lease agreement, to prove that you share these expenses with someone else.
For occasional expenses, such as stationery, paper, or printing ink, keep your receipts for any work-related purchases made.
Which Method is Best for You?
Whether the fixed rate or actual cost method is better for you depends on your personal circumstances.
For many people, the actual cost method will lead to a larger deduction. Using this method means you don’t claim 67 cents per hour and instead, all your expenses are claimed individually.
This includes electricity and gas, home and mobile phone expenses, internet expenses, stationery, and computer consumables, cleaning your home office, depreciation on office equipment that cost more than $300, and office equipment that cost less than $300.
To use the actual cost method, you must keep either a continuous four-week diary that tracks your usual pattern of working from home or a full 12-month record of the total number of hours you worked from home during the year.
Then, for each deduction you claim using the actual cost method, you specify how much of the item’s use was for work purposes.
Get in Touch with Nationwide Financial
Navigating the new changes to home office expenses can be complicated. Nationwide Financial has a team of experts that can help guide you through the process and ensure that you are claiming all the deductions you are entitled to.
Get in touch with us today to see how we can help you.
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