The ATO’s draft Practical Compliance Guideline: PCG 2022/D4 set’s out a new approach to claiming a deduction for additional running expenses incurred while working from home. Once finalised, it will be available for taxpayers to calculate their working from home expenses from 1 July 2022.
The hourly rate under this revised fixed-rate method is 67 cents (previously 52 cents), and you no longer need to have a separate home office or dedicated work area set aside in your home to rely on the new Guideline.
The following should be noted regarding the costs included in the fixed-rate method:
- Electricity/gas, internet expenses, mobile/home telephone expenses, and stationery and other consumables are included (so decline in value is claimed separately).
- Items previously covered were, decline in value, electricity/gas, and cleaning of the home office (previously phone and internet costs were claimed separately).
- This means that if a taxpayer uses their mobile phone when working from home, and when working from somewhere other than your home, the total deduction for mobile phone expenses for the income year will be covered by the 67c per hour.
Substantiation required is as follows:
- Records showing the total number of hours worked from home during the entire income year. An estimate or representative period will not be accepted – except for the period between 1 July 2022 – 31 December 2022. From 1 January 2023, a record of all hours must be kept.
- One document, such as an invoice, bill or credit card statement for each of the additional running expenses incurred. Where bills are in the name of one household member but the cost is shared, the other household member/s need to show that they have contributed to the payment of that expense.