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ATO's New Work From Home Deduction Rules

The ATO has released Practical Guidance Guideline PCG 2023/1 regarding how work from home deductions can be claimed from 1 July 2022. With work from home arrangements becoming more common over the last few years, it is important to know what you may be eligible to claim so you can keep appropriate records.

PCG 2023/1 provides taxpayers with two methods of calculating home office expenses:

Actual Expense Method

To be deductible under section 8-1 of ITAA 1997, a working from home expense must be:

  1. incurred in the course of gaining or producing your assessable income, or

  2. necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.

Where an expense is only partly incurred in gaining or producing your assessable income, it must be apportioned. Where there is no obvious method of apportioning expenses, it must be done on a fair and reasonable basis.

Fixed Rate Method

The revised fixed-rate method apportions the following additional running expenses you incur on a fair and reasonable basis by using a fixed rate of 67c per hour for each hour you worked from home during the income year:

  • energy expenses (electricity and gas) for lighting, heating, cooling and electronic items used while working from home

  • internet expenses

  • mobile and home phone expenses, and

  • stationery and computer consumables.

Therefore, a full-time worker would be able to claim up to $1,222 in home office expenses.

Depreciating assets, software, etc can be claimed on top of the above deduction.

To read the full release from the ATO click here, otherwise feel free to contact our office to discuss this further with one of our accountants.

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