2023 Tax Return Working From Home Deductions Changes

Changes to Working from Home Tax Deductions in FY 2023: What You Need to Know

By Travis Bacon

March 11, 2023

The ATO has changed how working-from-home deductions can be claimed in your 2023 tax returns. This affects both business owners and employees that complete duties from their homes. Given how tightly stipulated the attached factsheet is, we expect higher scrutiny from the ATO for any working-from-home deductions claimed.

Below is a summary of the new methods. The ATO factsheet provides greater detail and links to further information. The biggest thing to note is that if you wish to claim the revised fixed rate method, you need to be able to prove every hour you work from home after 1 March 2023, and not just a 4-week period. The fixed rate method also now includes phone and internet usage, along with computer consumables and stationery, which used to be separate deductions under the old methods. With these changes, we expect clients’ overall deductions and refunds/amounts payable to be negatively impacted.

Claiming the actual method, whilst you own your primary place of residence, will impact capital gains tax when you go to sell/depart the property.

Revised Fixed Rate Method

What is the rate? 67c per hour

What does it include? Phone, Internet, Electricity, Computer consumables (ink), stationery.

What does it not include? Depreciation, repairs & maintenance on computers and office furniture.

Do I have to have a dedicated home office space? No

Can I claim cleaning? Only if you have a dedicated office space.

What records do I need to keep?

From 1 July 2022 to 28 February 2023, you must keep a 4-week logbook/diary of the hours worked from home that reflects the whole period.
From 1 March 2023, you must record every hour worked from home for the entire period. No averaging is permitted.
Evidence that you paid for the items included in the fixed rate, such as the electricity, phone, internet, and stationery receipts.
Every receipt must be kept for purchases of computer and office furniture, repairs and maintenance, and cleaning.

Actual Method

What is the rate? Percentage of total costs

What does it include? Phone, Internet, Electricity, Computer consumables (ink), stationery, depreciation and repairs and maintenance on computers and office furniture.

What does it not include? N/A

Do I have to have a dedicated home office space? No

Can I claim cleaning? Only if you have a dedicated office space.

What records do I need to keep?

Every receipt for all expenses and evidence of how you worked out each expense's personal and work-related usage.
A 4-week diary/itemised bill is accepted for working out personal and work-related usage.

How Can TaxDigital Help?

TaxDigital specializes in helping you claim work from home tax deductions. Our team of experts can review and assist you in calculating the various methods to ensure you get the most out of your deductions while staying compliant. Contact us at 0407 438 849 or contact@taxdigital.com.au to receive personalized advice and assistance on claiming work from home deductions.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek personalised tax advice from us at TaxDigital. Information is current at the date of issue and may change.