Home Office Deduction Changes for Your 2023 Tax Return: Navigating the Maze

Here's what you need to know: New fixed rate per work hour The fixed rate for home office expenses has increased from 52 cents to 67 cents per work hour. This means you can claim a deduction of 67 cents for every hour you work from home, for expenses such as internet and phone usage, electricity, gas, and stationery. No shortcut method (80 cents) available from FY 2023 The ATO has removed the shortcut method for the 2023 income tax return, which means you can no longer claim a deduction of 80 cents per work hour for all home office expenses. Instead, you must use the fixed rate method of 67 cents per work hour. Expenses covered by the fixed rate The fixed rate covers the following expenses: Home and mobile internet or data expenses Mobile and home phone usage expenses Electricity and gas (energy expenses) for heating, cooling, and lighting Stationery and computer consumables, such as printer ink and paper Expenses not covered by the fixed rate The fixed rate does not cover the following expenses: Deduction for the work-related use of technology and office furniture such as chairs, desks, computers, bookshelves. Decline in value of assets can be claimed separately. Record-keeping requirements To claim the home office deduction, you must keep the following records: A record of the number of actual hours you work from home during the entire income year – for example, a timesheet, roster, diary, or other similar document. (No 1-month diary records to be accepted) A representative record of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023 – for example, any kind of record of the hours you worked from home for a particular period that you can apply to the whole 8-month period. A record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023. Claiming mobile phone expenses If you use your mobile phone for work purposes, you cannot claim it separately under the fixed rate method. Instead, you must use the actual cost method to calculate your deduction. Navigating the maze It's crucial to maintain accurate records of your work hours and expenses in light of the ATO's new regulations for home office deductions. Navigating the complexities of eligible expenses and necessary documentation can be daunting, but with our tax agent's guidance, you can confidently claim the deductions you're entitled to without getting lost in a labyrinth of information. Don't hesitate to contact us today for further information.